Bono Explains How Streaming Can Save the Music Industry…

bonomath

 

“One billion users is 1/7 of the earth’s population. If 1/10 of those people were to be part of a subscription service like Spotify has, and I’m a huge Spotify fan, at $10 a month… Do the math.  That’s a billion a month.  That’s $12 billion dollars.  That’s bigger than the entire music business coming out of one company.

Even if it was 5%, now musicians are suddenly in a game that people are ready to pay for, their lives are changed.”

Bono, during an interview with 2FM’s Dave Fanning

 

Image by Robert Scoble (2008), licensed under Creative Commons Attribution 2.0 Generic (CC by 2.o).

69 Responses

  1. Anonymous

    so Bono’s solution is to get 700 million people to pay $10 a month for music, forever… good luck with that…

    Reply
    • Anonymous

      No, his solution is the new digital format U2 and Apple are working on:

      “More details are starting to emerge regarding the new digital music format that U2 is working on with Apple. The project which Bono says would assure that songwriters and artists get paid for creating music is about 18 months away from launch. “I think it’s going to get very exciting for the music business,” Bono tells Time, “[it’s] an audiovisual interactive format for music that can’t be pirated and will bring back album artwork in the most powerful way, where you can play with the lyrics and get behind the songs when you’re sitting on the subway with your iPad or on these big flat screens. You can see photography like you’ve never seen it before.””

      Hypebot/TIME, last week

      Reply
      • Remi Swierczek

        No surprise to me to see Bono as a naive over glorified by Apple, Spotify and current live driven Hunger Games supporter of all inclusive streaming nonsense! He is on of those in charge of the Hunger Games.

        $12B that makes his mouth watering is just 22% of inflation adjusted 1999 and it will never happen! Just check 12 year struggle of XM with just 28M of most influential subscribers.

        Shame on you Bono!

        We can have $100B music industry by switching to simple discovery moment monetization.

        Radio, streaming and TV can be converted to music stores and we can be at $100B at just 39¢ per tune before 2020. All we need is new fair use act (YOU CAN DO THAT MR. BONO) or recover Google from final stage of ADHOLIZM!

        Reply
        • Remi Swierczek

          What hacking?
          There is always that first encounter with the tune, the WOW moment, we have to take money at the discovery moment or there is no money.

          We just need to get new fair use act and CRIMINALIZE current business mode of music and lyric ID services.

          At the moment Shazam or Google Music Search is a napalm burning the music house. Do you know how much revenues they can bring to music industry as a cashiers of emotions?
          Google at least 20x more than from ads, Shazam, the MOOCH ONE, first money ever!

          Reply
        • Anonymous

          “The new format that will be hacked within hours”

          Hehe, this really is a threat to you guys…

          Reply
    • Versus

      Why is that unrealistic? That’s less than the cost of buying 1 CD per month, and millions certainly did that.

      Reply
    • Anonymous

      Is he trained in this field or is he just talking from his head.(ass)
      Cause my lawyer told me a lot ppl like to talk like lawyers but never read the books.

      Reply
    • Current Subscriber Rates USA

      bono is really bad at math and believes in rainbow unicorns… looks at these numbers and tell me again this is going to scale… in IF you do believe it can scale, when does that happen exactly?

      Here’s what Subscription Models look like in the USA right now:

      Premium Cable = 52m
      Netflix = 32m
      Sirius XM = 26.3m
      Spotify = 10m

      And somehow Spotify is going to grow to 80m at $10 a head in the next three years? Really? Seriously? It’s just math. It’s simple, and it doesn’t work without INCREASING the subscription fee’s to sustainable rates.

      Reply
  2. Chris H

    I hold out more hope for the proposed format than I do for streaming to gain the necessary scale to push out the numbers Bono sees.

    Anyone bashing said format at this point is kind of foolish. We don’t know enough about it and secondly it is being worked on by Apple. That’s not to be an Apple fanboy. I just see the lessons they are learning having to be in the Paypal/Bitcoin business on a massive scale translating to supporting a market for music that is sustainable. That’s enough for me to be intrigued.

    The goal isn’t to eradicate piracy. Piracy has been around and always will be. It’s to hold it back enough to keep a legal music market viable.

    Reply
    • Paul Resnikoff
      Paul Resnikoff

      The format is vaporware currently, and even Bono says it’s years out. And that’s assuming Bono follows through with the project.

      And yeah, the top-level sounds interesting, but Bono isn’t technically describing anything, he’s not approaching it from a technical standpoint. And the devil is… well you know the rest.

      But there are even problems with the top-level description. Bono likened the format to a complete, deluxe vinyl copy of Sticky Fingers. Sure, you can walk down the street with an unmarked copy of the record, or, walk down the street with the full, complete artwork, and the real zipper! So you have a choice to really experience the full, complete, and interactive magic!

      Sounds seductive, except that all of this assumes that current music fans care about that. It assumes that younger and incoming generations have a yearning or appetite for a much older version of how music was consumed. The younger music fan wants music that fits into existing platforms and lifestyles: iPhone 6s, YouTube, cloud-based portability, access! It’s entirely speculative that ‘carrying the full Sticky Fingers’ is a missing void in the marketplace for anyone under the age of 32.

      I can’t help but draw a parallel to PONO, which was also cooked up by someone that thrived in a much different music industry. PONO requires a completely different player, a totally different purchase path, and isn’t compatible with the mainstream thrust towards streaming. Meanwhile, we’re seeing the quality of streaming gradually improve, month by month, until higher-end streaming experiences from the likes of WiMP are commonplace.

      There are even startups dedicated to improving the sound quality of all mobile music, regardless of the source. There are a lot of smart people thinking and experimenting and applying funds to solve this problem.

      The result? No one will even notice that sound quality had improved so dramatically. We didn’t need PONO to introduce it to us, because everyone is already working on this, including Spotify.

      So again, does the real Sticky Fingers fit into how people are consuming music, right now?

      But let’s see. Jimmy Iovine contended that music fans really wanted something better than the white earbud. And he was right, though I’d argue Beats by Dre headphones are more about fashionability than upgraded sound quality. But both are definitely part of the equation.

      Reply
      • Anonymous

        PR is correct, some souped up version of iTunes LP is not going to be the answer for the industry.

        Reply
      • Anonymous

        “does the real Sticky Fingers fit into how people are consuming music, right now?”

        And it didn’t cross your mind that the new format might provide experiences way beyond an old… zipper? 🙂

        Younger generations want what they’ve always wanted — new thrills — and Apple rarely disappoints in that department.

        Reply
        • Anon

          True. With the exception of the last announcement where they released a phone that is less powerful than my 2 year old Nexus 4 and a watch that gets outshined by the Moto 360.

          Color me underwhelmed.

          Reply
          • Anonymous

            “they released a phone that is less powerful than my 2 year old Nexus 4”

            iPhone 6 is Apple’s biggest success ever, though. 🙂

            It’s so good to see that their music stunt paid off!

            It paves the way for more of the same, and shows how extremely valuable music is today…

      • Blahblahblah

        Good points. I think the general public’s interest in high quality audio peaked in the seventies. Since the Walkman, it’s been all about portability and convenience. I love great sounding audio but I like that I can listen to most music I can think of, anywhere I go, with my Rdio subscription. (Way better than Spotify, IMO) I got rid of a couple of thousand CDs and still have a couple of thousand vinyl LPs that I pull out only occasionally. I don’t think any new album format is going to take off with the masses. Ever again. New world.

        Reply
  3. anonymous

    Its already free. Nobody wants to pay. Why would they? How about making bars that play licensed music pay for it. I see cover bands playing in bars that aren’t paying BMI etc. Remember Muzak?

    Reply
    • Anonymous

      “Nobody wants to pay”

      Nonsense — music is more valuable than ever: Samsung paid $5m for 1m copies of Jay-Zs album in 2013, and Apple paid millions for a U2 album now.

      Big Tech can’t survive without music.

      Reply
        • Realist

          No, he isn’t. Big tech = Google, which doesn’t make anything. They subsist on ads, which no would see if it wasn’t for music and movies.

          Reply
          • jw

            Yeah, because no one uses the internet for… I dunno… e-mail, chat, mobile apps, wikipedia, news, blogs, instagram, twitter, facebook, recipes, video gaming, podcasts, video blogs, viral videos, tumblr, pinterest, ecommerce, online dating… I can keep going, if you want.

            And Google doesn’t make anything? Are you insane? Gmail? Google Maps? Google Earth? The Android operating system? lololol The Nexus phone? Google Finance? Google Drive, Google Docs, Google Wallet… Google makes TONS of things.

            Get with it, homes. Seriously. lol. You have no idea what the internet is.

          • Versus

            Tech might survive without music, but it would lose some of its raison d’être.

      • Paul Resnikoff
        Paul Resnikoff

        It’s too difficult to generalize. At a top level, I’d say that b2b music licensing uses are typically paid for and under control. There’s monetization there, and players that can operate well within that niche.

        The b2c arena is almost the complete opposite, and has only been ‘monetized’ by basically replacing completely free, P2P listening with free, largely ad-supported channels that are legal (YouTube, Spotify, etc.)

        Reply
        • Anonymous

          “It’s too difficult to generalize”

          Really?

          I dare you: Remove all music from the Internet and see what’s left.

          Reply
          • jw

            Here’s a short list.

            – Netflix
            – Hulu
            – Wikipedia
            – Online banking
            – Snapchat
            – Twitter
            – Instagram
            – Facebook
            – Google Docs
            – IMDB
            – blogs about beer
            – blogs about whiskey
            – blogs about fitness
            – theonion.com
            – hbogo.com
            – online dating websites
            – websites that teach you how to restore a ’59 Chevy Impala
            – videos that teach you how to restore a ’59 Chevy Impala
            – amazon.com
            – google maps
            – websites that teach you the history of the civil war
            – websites that try to teach you about the civil war but do not reflect actual history whatsoever
            – religious websites
            – every episode of Radio Lab, & Marc Maron’s podcast, & every other podcast, including dozens on professional wrestling, & probably hundreds about alcohol
            – state & federal laws
            – fashion blogs & websites
            – in depth weather forecasts
            – videos of skateboarding from the 1970s

            And I mean that’s just the tip of the iceberg. I mean the teeny tiny tip. You could spend days… probably months listing everything that is useful about the internet & not even get halfway there. That’s why internet search moved from the directory model (like Yahoo! back in the day) to a model where computers run automated programs to scan the internet, because it can’t be manually documented. And most of it is not music. In fact, music is just a small part of it. The only thing that could lead you to believe that music is a huge portion of the internet is the fact that multimedia files are large & inefficient, whereas text and photographs are much smaller & more efficient, so multimedia files make up a disproportionate amount of traffic, though the majority of the internet consists of information & photos & apps.

            I left out porn. The internet has lots & lots & lots of porn.

            Have you ever even used the internet before?

    • axgrindr

      “How about making bars that play licensed music pay for it.”

      How do you know they are not paying for it? Are you going around the country asking them or are you just assuming that when you hear a song you recognize that it is not being paid for.
      BMI and ASCAP do a pretty good job of harassing bars and businesses for payments, taking them to court, bankrupting them if they cannot pay up.

      Reply
    • Anonymous

      “streaming is the ENEMY”

      He knows that — that’s why he’s windowing the new album. Action speaks louder than words, you know… 🙂

      Reply
      • Me

        Are they actually windowing it, though? Obviously it’s not going to be on streaming services (or any download services not owned by Apple) right now as they have an exclusive deal w/ Apple.

        Reply
        • Anonymous

          Do we have to perform this ritual every time an act boycots Spotify?

          Bottom line: The album is not available on Spotify.

          You can call it anything you like, and it comes in all shapes and sizes, but it’s a trend and it has turned Spotify into a museum.

          Reply
          • Trollhunter

            You would be correct if your definition of museum was “a place full of stuff that was more than a week off the production line” So cute all this pointless ranting against streaming.

    • Versus

      Is it the “enemy” in principle, or only in its current form because of its insultingly low pay-out rates?

      Reply
  4. Beats

    Am I the only one thinking why Bono says he’s a huge Spotify fan and not a fan of Beats Music which is owned by Apple? Interesting. Maybe Beats Music really is going the way of the do do bird.

    Reply
  5. steveh

    Bono is talking nonsense about Spotify.

    Sure 700 mill subscribers would be great – but at the moment the number of paid subscribers is only about 1.5% of that number.

    So Bono:- how the fuck do you propose to build this number up to 700 million? Eh?

    Surely this is the 64,000 dollar question is it not?

    Reply
    • Nissl

      He’s only saying 100m subscribers. But he has the global size of the recorded industry wrong, it’s more like $16b.

      So, get to 150m global subscribers at $10/month and you are talking. Even 75-100m might be enough with another 300-400m contributing via ads. But we are very far from that today. Spotify has 10m paying subs. Add up all the other services and you might be near 20m. Might. And at least one service has been available in pretty much every western country for a while now at this point. Go outside the west and nobody’s going to pay $10/month.

      Reply
      • steveh

        Sorry 100 million – (I was confused by the first comment).

        But my main question remains completely valid.

        How the fuck do we get to 100 mill (or as you say better 150 mill)??

        How? How? How? How?

        I mean talk about pie in the fucking sky! This is totally ridiculous.

        Reply
        • Nissl

          Well, Spotify has 3m+ paying US subscribers and 10m globally. Netflix already has 36m in the US and 50m globally. I can see how Spotify + Youtube Key + some kind of iTunes sub could get into the necessary range by say 2018-2020.

          However, as Spotify’s free to sub ratio makes clear, the free tier right now is too good. Surely they could institute, say, a month of windowing for new releases. Perhaps a moderately limited $5 tier to smooth the transition. The second problem is the large ownership shares in Spotify held by the majors, as well as the large upfront catalog licensing fees they get, which don’t go back to the artists at all.

          Reply
          • steveh

            Bono was talking about 100 mill subscribers to Spotify alone. This is hopelessly naive. I see you agree with this with regard to Spotify.

            No-one knows what the effect of Youtube Music Key is going to be.

            Not sure when this “streaming saving of the music business” is likely to occur, but 2018-20 is surely wildly over-optimistic.

          • Anonymous

            “Bono was talking about 100 mill subscribers to Spotify alone. This is hopelessly naive”

            The funny part is that his new album isn’t available on Spotify. 🙂

            So much for his belief in streaming…

      • steveh

        It’s actually worse than pie in the sky.

        It’s snake oil, ponzi scheme, pyramid selling.

        Even Ek is only touting a dream of 40 mill subscribers and that is not enough. And in order to get there they will be taking down iTunes and CD sales (so-called “ownership”) so we will be losing more that we will be gaining.

        Madness!!

        Reply
  6. DNog

    Hey if Bono wants to work on a new format that will help the industry I’m all for it. If it fails, we’re right back here anyways.

    Reply
  7. Simon Tait

    HEY BONO GET A CALCULATOR, BUDDY!

    Let’s presume that an annual gross personal income of $20k is the threshold point where an individual might have the disposable income & financial stability to even become a prospective customer…ie: Those who could even afford it as a luxury purchase.

    That’s about 10% of the world’s population ( = 700 Million).

    Subtract 25% for people aged 0-14 ( = 525 Million)

    Let’s optimistically say 1-in-5 are actually interested enough to become a Spotify user ( = 105 Million)

    Multiply by Spotify’s current ‘paid-up’ conversion rate (roughly 20%) = 21 Million

    That leaves 21 Million folks, best case scenario

    Spotify doesn’t have much more room to grow unless they move to Mars.

    Reply
    • Nissl

      Netflix already has 36m subscribers in the US alone, 50m globally. Your ceiling is too low.

      Reply
      • steveh

        Music consumption and cinema/move consumption are two different beasts.

        I don’t think comparing Netflix to music streaming is valid.

        Reply
        • Yep

          By different beasts, do you mean Spotify is a less desirable product to Netflix?

          Netflix has around 10,000 movies on it’s service. Spotify has around 35,000,000 tracks. Netflix has no access to brand new feature films. Spotify has exclusives and access to almost every new release in the western world.

          Spotify has off line options and generally is kinder to your data use.

          Music is far more transferable across countries and cultures, Spotify is a much more scalable proposition.

          Reply
          • steveh

            I’m simply saying that using the comparative success of Netflix as evidence of the possible eventual success of Spotify is not a valid comparison.

            The recorded music market and the Cinema/TV market are different. That is all.

          • Yep

            I think it’s valid in terms of the public’s acceptance of the subscription model, for cloud based entertainment products.

            That’s the main hurdle here. We know music is popular, it has been more popular than movies in the past.

            The popularity of Netfix has proved that consumers are comfortable with the model.

            The services just need to fix the price point, promote, and get more exclusive content and it will grow very quickly.

          • steveh

            Yes but the entertainment/artistic experience a consumer seeks from Netflix is very different from that of the Spotify music user.

            The means of delivery is somewhat irrelevant to this.

          • Yep

            It’s not that different.

            My feeling is that it will merge more and more over the next 10 years. Movies and Music will come from the same service onto your device, for a flat monthly fee. YouTube is the beginning of this, so once curation has been added and the interface is nice and clean (Netflix has really nailed that!) everyone will gravitate to one service for music and movies.

          • steveh

            Maybe you are right, but that sure wasn’t what Bono was saying.

            Also if a merged music and movie streaming service emerges surely the monthly fee needs to be higher, because it will be supporting two different industries. Would people be prepared to pay more?

          • Yep

            I think so. If you had all recorded music and all films and TV shows in one package, on demand.

            If you look at what people pay in the UK now for broadband, TV and a subscription music service it is around £50 ($70) a month.

            So, that would be a kind of price point for the lot!

      • Simon Tait

        The value proposition for a Netflix subscription (roughly the same $ value as Spotify) is possibly perceived as more attractive than for music at this time . Unlike for film, the natural ‘production cost barriers’ that once filtered out the mediocre shite and half-baked backyarders from ever recording music (I know this is an objective judgement call) has disappeared. The place is knee-deep in cheap, smelly dross and thus music is cheapened as a whole. My life revolves around music, but I’d rather watch The Thick of It than listen to bloody U2 or whoever’s Ableton preset is popular this week…

        Reply
  8. FarePlay

    Time for musicians and songwriters to stand up and stop bending over.

    “Up to 15 percent of the music that Sirius XM plays is from before 1972. It paid recording royalties last year equivalent to about 9 percent of its $3.8 billion in revenue.” Ben Sisario, NYT

    So, time for Pandora, Spotify, et al to stop blaming the cost of copyright for their troubles and start selling subscriptions and advertising, like Sirius XM. Man Up, Pay Up.

    http://www.nytimes.com/2014/09/24/business/media/sirius-xm-loses-suit-on-royalties-for-oldies.html?emc=edit_tnt_20140923&nlid=47357167&

    Reply
  9. Willis

    People need to stop fooling themselves. In the digital age, everything can be “pirated.”

    Reply
    • Versus

      “Can” and “should” are two very different claims.

      One can steal candy from a baby, bully the weak, cheat on one’s spouse, cheat on taxes, lie to friends, cheat colleagues and associates, etc. etc. etc. None of that means one should.

      Where is individual conscience in all of this?

      Reply
  10. Ash

    I don’t know if the music industry can be saved. I’m not the most pop-centered for a 21 year-old musician, but clearly plenty of people are glad to be eating up whatever the majors churn out into the mainstream that gets played on radio. I think it’s easy for many of us who love rock and music from decades ago to think that, although rock clearly isn’t that popular anymore, it can go back to how it was both musically and financially only a decade or two ago. That’s not to say rock still isn’t relevant and important – it is – but as we’ve all been discussing for years, I don’t think you can turn back the clock.

    It seems to be more about: ease of access to content (which is the only reason, in my opinion, why streaming companies like Spotify even exist) which with improving technology (smartphones) became more important and helped to off-set the annoyance of having to download (legally or illegally) music and then upload it to your phone; listening to whatever single is hot (everything from Gangnam Style to Anaconda or whatever it’s called, whether they’re any good or not, garners some interest, plays, money, and hits for a brief amount of time) which although that has always played a role in the industry, it seems like it’s even less about the actual music than it ever has been before. I think a lot of young music fans would rather just hop onto whatever bandwagon is cool at the time, fit in and brag about the ‘hot new thing’ with friends or on social media, and then move to the next thing. As Billy Corgan once put it, music is somewhat of a sonic wallpaper now.

    The mainstream has always had that sort of mentality – blindly follow the changing fads. But, when Napster hit the web and things started to change, I feel like everyone in the industry (both the creative and business sides) threw the baby out with the bathwater. It seems like people would rather just listen to some mindless pop song with meaningless lyrics (of which there are many) and escape their lives rather than listen to something (whatever style of music) that forces the listener to think or connect on a deeper emotional level. It’s like Jack White recently put it in an interview with Dan Rather, comparing how photographers and visual artists now essentially have their work reduced to something cool you send to a friend for them to look at for a few seconds, then move on to the next thing. Obviously, that’s just his opinion, but it feels like the overall importance of music to the average person (not us musicians or music lovers) is dictated by societal attitudes and at this point, there doesn’t seem to be enough of it in the way that people will actually go out and buy it because they just have to have it.

    I don’t know if I made much sense (I’m writing this on the go) but I certainly don’t think streaming, or any one thing, will save the music industry. Like a lot of you have mentioned in the comments, as far as the actual copyright laws go, and the royalty rates at which deals, labels, and publishing function (to which others can attest more than I) are modernized, it doesn’t really seem to matter what anyone does.

    Reply
  11. Base

    None of this matters because music is now disposable. We hear, we like it, we move on. Its that simple. I used to happily pay for music but that was when I could walk into a store and buy it. Now that there are NO stores its out of sight out of mind. Music has become invisible to the consumer so the idea of paying for it is also invisible. Only kids who want the newest thing will pay to “experience” it and that mean seeing it live! You think every kid who goes to EDM show knows the music? Hell no, they go to hear the new shit and meet new friends. Get it, kids only want whats new and they dont look back because everything is moving so fast now. Sticky Fingers – who gives a shit about that, thats for my grandparents. Bono and the whole fucking record business is too old and restrained by old thinking to see whats really going on.

    Reply
  12. Amyt

    So, Bono, who has done so much of philanthropy stuff, is very quick to forget that most of those 7 billion potential customers are living in developing nations and NOT in the USA. USD 10 does not mean the same thing in China or India as it does in the States.

    Reply
  13. Dave Buerger

    Who’s that laughing guy next to Bono? Isn’t that the dude who created the Internet? These bros make a good pair.

    Reply
  14. Tyler D

    Most of you are viewing from your present perspective. What about the generation that’s being trained to spend on accessing premium ideas, and information. That’s who they’re concentrating on. Not you old idiots.

    Reply

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