As I posted earlier in the month, the music subscriptions space is going through an important period of transition. It took much of the last decade to realize that the 9.99 premium rentals model was only ever going to appeal to a niche of music aficionados, and though global premium music subscribers total 8.25 million, we’re still no closer to mass market appeal for premium subscriptions. And yet we have a host of new entrants including, MOG, Spotify Premium, We7 Premium, Sky Songs, Virgin Media etc etc.
So what’s changed? Well, both a little and a lot.
The niche audience is getting bigger. Firstly, the appeal for premium subscriptions is still a niche addressable audience of tech savvy music aficionados, but that audience is growing. It’s still far from mass market (and never will be) but it’s a more attractively scaled base now. A few million per major music market perhaps. For a company like MOG that’s plenty enough addressable market. Also improvements in consumer technology and connectivity make it easier to deliver a high quality on-the-go cloud based experience, a crucial asset.
This is a bold play that places MeeGo into a competitive position with Android, iPhone OS, Google's Chrome and even desktop software like Ubuntu (as well as the mushrooming moble-centric smartphone software like Palm's WebOS, Samsung bada and Windows Phone).
Intel's support will raise the ability of the new platform to attract device makers as well as the app developers that every smartphone and smart mobile platform desperately needs to be competitive.
They have lots in common: Both are Linux-based; both predominantly target mobile devices; both aim to deliver outstanding rich consumer Internet experiences; and both have been more talk than action to date. Nokia needs to shift step quickly from talking to walking and even better running or the high end market in Europe will be dominated by the same players as in North America and Nokia will have to pursue a winback strategy. It's taken Nokia nearly five years since the first Maemo device shipped to launch the first phone, the N900, and that is not the complete product -- as Nokia concede -- impressive although it nevertheless is (read my first take on the N900 in this Forrester report).
Real Networks yesterday announced that they intend to spin-off music subscription service Rhapsody as a stand alone business. Rhapsody has long been held up as the best of breed music service, but in the age of Spotify and Comes With Music it and other premium rentals have increasingly struggled to maintain relevancy. Spotify and Comes With Music each may have fundamental business issues and are very different offerings, but they both provide unlimited music free at point of consumption. Once you have that proposition in the marketplace selling 9.99 rented streams looses its shine, however good the discovery and usability may be.
This time two years ago Rhapsody, Napster and Yahoo had about 1.8 million paying subscribers between them. Since then Yahoo got out of the game (passing its subs onto Rhapsody), Napster got sold and the total count is now around 1.3 million. So just as the music industry is meant to be booming online, its premium tier sheds over a quarter of its value across its heavyweight proponents.
The simple fact is that charging 9.99 or more a month for music that often only sits on your PC is not a mass market value proposition. It’s great for aficionados but mass market consumers aren’t used to buying music that way.
So is this the end for subscriptions? No, not at all, in fact they’re doing better than ever, it’s just the old guard that is struggling to keep pace. A new generation of subscription services are being built that place portability at their core and that often hide some or all of the end-cost to consumers.
Let’s take a quick look at the numbers, here are total paid subscribers by territory (all numbers are approximate):
I have a favour to ask of you: I have the germ of an idea which I am developing for a forthcoming report and I want try it on you. So please let me know your thoughts.
Apart from the persistent pressure of free, two of the recurring trends that look set to shape the future of digital music are:
First a few thoughts on the cloud….
The cloud is of course is already with us, but largely as a collection of disparate connected music experiences (e.g. Pandora, Spotify, Comes With Music) rather than as something more all-encompassing. I’m skeptical of the truly ubiquitous experience happening anytime soon. Indeed, the practical limitations on ubiquitous connectivity mean that connectivity will in fact fall short of ubiquity for some time (more on that from my colleague Ian Fogg later this year). But it is clear that over the next few years more of the dots will be joined. And sometimes the dots will be joined by innovative workarounds, such as Spotify’s ‘offline’ streaming solution.