15 Reasons Why You Should Never, Ever Buy a Streaming Service…


Jay-Z is about to buy Aspiro AB, a company that owns the relatively unknown WiMP and TIDAL streaming services, for $56 million. Here’s why that’s the worst idea in the world:

(1) Spotify Will Easily Outspend You.

Spotify has 60 million users, 15 million paying subscribers, and hundreds of millions in funding.  They are blowing these hundreds of millions annually to buy subscribers and amass marketshare, and they’re about to get hundreds of millions more to throw onto the fire.

Spotify can’t make a profit, and may never figure out how to make a profit.  But you will die while they are trying.

(2) YouTube Will Destroy You.

What’s bigger than Spotify?  YouTube, which is easily the biggest music streaming platform in the world (and it’s entirely free).  Not only that, YouTube has every music video in the world, all completely shareable, and almost all assembled in smart playlists.

They’re pushing Spotify into a corner, which means they’re already destroying your chances of survival.

(3) YouTube Music Key Will Destroy You.

Jay-Z, please listen.  YouTube is now pushing a premium streaming component, called Music Key.  They’ll work out their public relations problems, and they’ll spend just as much as Spotify to get paying subscribers, if not more.

Will Music Key be a piece of crap?  It’s Google, so probably.  But this will be a really giant piece of crap that will push your service(s) further to the fringe, just because they have the money and mindshare to do that.  You will die on a hill called ‘Audio Quality’.

(4) Apple

Apple just blew $3 billion on Beats.  They desperately need a streaming service to compete with Spotify, and Beats Music has hardly any subscribers in comparison.  They are years behind, but they also have an arsenal of tens of billions of dollars to catch up.

You really want to dance with these elephants?

(5) Deezer

But wait, there’s more.

If you’ve never heard of Deezer, then know this: Deezer has 5 million paying subscribers, and they’re in more countries than any other streaming service.  As of right now, they are present in nearly 200 countries, and they’re still considered an also-ran against Spotify, YouTube, and Apple (Beats).

Not only that, they’ve already spoken with or secured deals with most of the major telecommunications carriers in the world, as have…

(6) Rdio, Rhapsody, Muve, Sony, Samsung, Saavn…

That’s right: streaming music is completely over-populated, totally saturated, and devoid of profits.  And that includes some of the largest companies in the world.  Sony just gave up and handed their platform to Spotify; Samsung is struggling to get something started; and some other mega-company is trying to figure out a way in as we speak.

Even Saavn has 11 million users in India!  (But you’ve never heard of them).

Does the world need another streaming service?

(7) Nobody cares about streaming fidelity.

People might say they care about sound quality.  But the reality is that most do not, even if they own a pair of Beats headphones.  Case in point: YouTube has crappy audio quality, yet its the largest streaming music service in the world (and quite possibly, the largest source of music listening overall).

Which means that asking people to pay $20 a month for TIDAL (Aspiro’s higher-quality streaming product) is a play for a small niche.

Sure, there are audiophiles out there who buy Sonos players,  high-end speaker cables, and have a lot of money.  But that’s a very, very limited audience.

(8) Your competition is already gaining on fidelity.

If you think TIDAL has a competitive advantage right now, then understand this: fidelity ‘advantage’ will probably vanish within 2-3 years.  The reason is that major players like Spotify are already rolling out fidelity improvements, when it makes sense to do so.

And eventually, bigger bandwidth, better mobile connectivity, and bigger local storage will make higher-quality listening a reality.  And the average user won’t even notice the improvement (and they definitely won’t pay $20 for something that sounds the same).

(9) What happens in Scandinavia mostly stays in Scandinavia.

In some ways, Norway and Sweden are first-movers; in other ways, they are false indicators of market trends.  These are relatively tiny countries where some degree of financial success and control can be accomplished.  Other, larger countries like the United States are far more competitive, far more chaotic, and don’t behave in the same way.

Norway isn’t the world!

(10) Your IPO Prospects are Very Uncertain.

If Spotify has an incredible IPO – which is doubtful – then maybe you’ve got a shot at taking this public.  But Wall Street is already extremely skeptical of Spotify, especially after what happened with Pandora.   Streaming services are financial sinkholes, and financial types already got the memo (even if it’s signed by Goldman).

(11) The Acquisition Market Is Very Limited.

Beats sold for $3 billion, but that’s because (a) Steve Jobs wasn’t alive to veto it, (b) it was attached to a successful headphones company, and (c) Apple has $3 billion to play with.  This isn’t a mistake that happens very often, and the more this goes on, the more obvious this will be to prospective buyers.

(12) Major Labels Will Control You (and your company finances)

What’s the first thing that major labels do when they see a streaming service coming?  They bend it over.  That is, they demand massive percentage stakes in exchange for licensing, and they have the power to change those percentages every year.

Not only that, they can decide to change their royalty payouts at any point.  All of which means, they control your profit margin, not you.  And if you fail, that’s basically your problem, not theirs, especially if they negotiated upfront advances.

(13) Artists Don’t Like Streaming Services and Will Resent You.

Most  artists hate streaming services because of the dismal payouts (if they get paid anything at all), the complete lack of control over their catalog, and their inability to enjoy in the biggest successes (acquisition, IPO, whatever).

But they’re also stuck.  Taylor Swift pulled out of Spotify because she could; everyone else knows that if they jump ship on streaming services, they’re dramatically increasing their chances of obscurity.  And obscurity equals certain death for any musician.

Is that an environment you want to be a part of?

(14) Superstars Will Demand Big Payments from You.

Some artists will join WiMP or TIDAL because you, Jay-Z, are the owner.  Most others will look over the situation, tell you ‘f–k you, pay me,’ and leave if you don’t.  And when they leave, you can have fun streaming those artists on YouTube.

(15) Celebrity Only Goes So Far.

Neil Young has raised more than $10 million for Pono.  But that’s because he’s a charismatic celebrity, not because Pono has a business model (or that people genuinely care about music quality).   And no celebrity is going to make people buy expensive, high-fidelity downloads.

The same thing goes for $20-a-month streaming services.



Image by B Rosen, licensed under Creative Commons Attribution-NoDerivs 2.0 Generic (CC BY-ND 2.0).  Written while listening to Chopin (on YouTube).  

77 Responses

    • Remi Swierczek

      A/ All streamers, including YouTube are good.
      B/ Streaming is here for a long haul and soon terrestrial radio will stream to our cars.

      The problem we have is derailed income equation:

      Global music, not counting impressive live, is worth to an idiot well over $100B dollars!
      Streaming subscriptions will never add up to this ballpark! 300million @ $5.99 global avg. = 21 billion !!!!


      So, let’s play the music, play the best you can for particular public and charge for discovery.

      We can convert both Radio and streaming to discovery based music store!

      $100B MUSIC INDUSTRY BY 2020 WOULD BE (I would say is) UNAVOIDABLE!

    • Steve-O The Audiofile

      Understand the negative comments… but hear me out here….

      Artist that are awesome deserve to make millions of dollars… as they do with tours, interviews movies etc etc etc.

      But why in a world where mass media exists should the common man still be required to overly finance these stars… Im not only talking about musicians but actors as well…. Why should we all pay for movies and documentaries that are years old???

      Ok so my point… We live in an age of information and mass media… This is the key point… A blockbuster movie or a hit song isn’t once or twice a year anymore its weekly/monthly and yet we are expected to pay more than ever before even when you take into account time value of money…. So why is it we have people making 10’s to 100’s of millions of dollars on something that is becoming a dime a dozen.

      McDonalds has dropped their price of a big mac…. Lets look at the basic principal of economics…. there is an over supply of media and yet the demand is lower…. however it is viewed as golden….

      Kim Kardashian…. Your the next Paris Hilton (and her old Friend)…. Kanye West your a try hard Jay Z….. I know you guys worked together, but honestly your a douche….

      Mass media and entertainment is not new people!!!!! its dime a dozen yet its still sold at a premium…

      Im not saying stars shouldn’t get paid and paid well, but in this age of information if you cant entice people to pay for your performance in concerts and appearances, then Im sorry your not the next god mr West.

      The issue isnt streaming service and licensing anymore the issue is are these people really so special that they deserve all our money??? 20 years ago people would buy an album every few months, now we are expected to pay the same price within time value of money on a weekly basis….

      If the rest of the world has to adjust to technology, so should artists… Why should I pay to listen to your music if I’m not willing to pay to come and see you in concert??? and you might call yourself God Mr West, but I have never purchased a Bible so why should i purchase your song???

      And PS I’m an Atheist. And if you ever become the president of the USA we are all F&*?ed… The current administration may suck but you my friend are a symbol of what is wrong with america… and I like your earlier songs…..

      The issue is not Piracy the issue is that media is still a commodity…

      If your music is good then people will pay to see you, not to listen to something that is free to the airways.

  1. jw

    Everyone wants to say, “I told you so,” but competition is the lifeblood of our economy. In every industry there are players that push the industry along but eventually fall by the wayside. If Tidal breaks even or even loses money for Jay Z, he’s diversified. It’s not a huge deal. But it’s important that people are pushing the boundaries, rather than letting Spotify rest on its laurels.

    Maybe consumers don’t care about fidelity now, but it’s not as if they never did. And why hate on the folks who are trying to swing the pendulum back in that direction? This is how people start to care… you have to offer the service & convince the consumer of the value. There was a point in time when no one had any desire for a tablet, & if you just polled people, you’d come to the conclusion that creating the iPad would be a terrible waste of money. Apple proved that notion wrong by being forward thinking… the one thing the music industry has never been. It’s easy to make these lists of why this or that won’t work… there were people doing that when the Wright Brothers were trying to invent the airplane. Pretty much every great advancement had very logical, reasonable, even convincing detractors. But great entrepreneurs are able to transcend that.

    I agree that Spotify will eventually increase their fidelity (esp considering Google Fiber is launching in a handful of cities in the southeast), but I think enough people will pay for it if it’s $9.99 vs $12.99, regardless of whether they can actually hear the difference (confirmation bias). Of course that’s not to say there is no difference, only that it may be obscured by the consumer’s hardware setup. And maybe that competition causes Tidal to drop it’s price to be competitive. That would be great for the consumer.

    Ultimately I think there’s room for competition, & if there’s going to be competition, you need an angle, & right now Tidal is the only service with a convincing one. There is value in being first to market… Spotify is proof of that. If I were going to buy a streaming service right now, I would go with Tidal/WiMP.

    • DeezNizzuhh


      Only a handful of people in the world, nerds basically, care about fidelity. And even fewer understand what it means. People listen to music for mood/emotional reasons. Only nerds listen for analytical reasons. The recording/mixing/mastering determines the fidelity of the recording.

      Most people aren’t interested in those factors which is why mp3s just work.

      And most people mistake high fidelity for just plain ol’ good recording/mixing/mastering techniques.

      • Eddie

        I disagree. I´m not nerd, I´m a musician. And I like listening to music that´s not so compressed that literally loses all its beauty. If you feel comfortable listening to the AWFUL quality of, say, youtube, is quite alright. But not only nerds care about fidelity. There´s a lot of people out there that enjoys hearing music on the quality side.
        So, please don´t speak for everyone, that´s not smart.

      • Sebastian

        Anyone that grew up with records and cd’s and Still has not gone deaf cares about fidelity and laughs at any prick with beats and feels sorry for a whole generation growing up on shitty MP3 and never having heard a proper sounding album.

      • satrams

        EVERYONE should care about fidelity. If you say you don’t care, guess what? You get ripped off, or if you’re not paying, you get taken advantage of by accepting something inferior when it is totally possible for the companies to offer better. Then us people who do care or realize we should get screwed by the ‘lowest common denominator’. Do you care about the quality of a bottle of wine, for example?, or is a generic wine good enough for everybody and all wine is the same?

  2. Irving Mindreader

    It’s a nominal M&A spend for billionaire Jay, and likely hedged bigtime with OPM.

    The only play here is a quick reskinning, tighten up marketing to game the metrics up a notch, then resell for 2X or better at fairly low risk.

    Given the fragmentation at the high end of the market, and the bath that Pono is taking, it’s fairly easy to project some future consolidation, at least on the services side.

    Not the easiest play, but not rocket science either. My bet is within 18 months we’re talking about the $50M he made on the deal.

    • Tcooke

      Doubt it. If this was straight wallstreet shit, it would be in an emerging market, like a vape company. This is gander around the pole horseshit. I need a day job i think.

  3. Emmett McAuliffe

    16. Streaming is not even a thing. To say “streaming service” says nothing about what your business model is. Streaming and downloading are methods of delivery of digital content, not indications of ownership, rental or indeed, of any business model. You can have rental that is delivered by download. You can have ownership that is delivered by streaming. You can have subscription downloads.

    When people say “I stream all my music! It’s great!!”, all they are doing is marvelling at the convenience of having some music or other in the cloud and available on demand. But it does not have to be a rented, all-you-can-eat service, it can be stuff you borrowed from the library, indeed it can be your own collection just put into a music locker.

    • Remi Swierczek

      Thank you for your input.
      Can you answer a question on the issue of “fair use” practiced by Shazam, Google and other music and lyric ID services. They are the ones who dismantled the walls of “music stores” and fuel as we speak piracy.

      Q: Can music industry lobby in new “fair use act”?

      This would prevent active collection and storage of someone’s property for the sole purpose of searching thru it at the request of the strangers without any control or permission of the owner.

      Nature of digital media makes you automatic owner if you know the author and the tittle of media, so I do not see here any fair use. We are witnessing strong participation in common theft.

      If your answer is YES then next day Radio and streaming can be converted to common, discovery based, music store.
      With over two billion users of music and lyric ID services we can have $100B music industry by 2020 at just 39¢ per tune.
      Just fire Shazam or Google the (free) PIMPS of music and hire them as (paid) CASHIERS of happy and profitable music industry.

  4. Anonymous

    High fidelity streaming services will never become popular in the US until they actually become affordable to use.

    Specifically, mobile data caps are not friendly toward lossless streaming services. Spotify’s standard mobile bitrate is.96 Kbps. Pandora’s is between 32-64 kbps. Rhapsody & Slacker’s standard mobile birate is 64 kbps. FLAC can top 1000kbps. If you have a 10GB family cap or a 2GB individual cap, which bitrate is going to be the most logical choice for you?

    The majority of mobile listening is done via mobile phones. And the majority of streamed music is streamed at bitrates less than 128 kbps, even though higher birates are available. There are a few unlimited plans in the US. But a lot of Sprint’s network is crap and T-Mobile’s coverage is the smallest of the 4 major carriers.

    • jw

      Where are you getting this info from?

      I always thought the default for Spotify mobile was 160kbps, & that 96kbps was just an option. FWIW, I keep mine at 320kbps & have a 4gb/mo plan.

      I agree with you about mobile bandwidth… my Android sucks a lot more data than my Windows Phone did, & I’ve resorted to downloading a lot of my favorite playlists to my phone to compensate. With Tidal, I’d likely have to download all of the playlists I listen to regularly to my phone (I used it for 2 months & this is specifically why I cancelled). But I think that demand is eventually going make carriers adjust their plans, rather than waiting on their plans allowing for consumer demand. The FCC changing the definition of Broadband from 4mbps download to 25mbps download yesterday is the first step towards that happening.

      I get the impression that mobile carriers are really trying to stave off video streaming, & HQ audio streaming is just a casualty of that right now.

      • Anonymous

        Spotify’s default on mobile devices is Normal with is 96 kbps. 160 kbps “High” and 320 kbps “Extreme” are optional but not default. There is a post on it in the Spotify FAQ section. I’d post a like but posts that include links seem to disappear around here.

        Pandora’s default is actually ~32kbps. Their high quality is 64 kbps. The 192 kbps “Pandora One” bitrate is not supported on mobile devices.

        Slacker’s “Good” audio quality is 64 kbps. Their “Best” is 128 kbps.

        Most people don’t realize just how low the default mobile bitrates are. FM or a quality wide-band AM stereo receiver would actually sound better than the default bitrates of most mobile services. Unfortunately the only thing more rare than one of those receivers is a station that still broadcasts in it.

        • Anonymous

          which will change… wifi spots all over the place, not to mention in the states they are running out a promo right now of all inclusive data for a set rate, and once they figure that out and go ahead with an unlimited set fee data, its game over…

          • Anonymous

            At&t and Verizon have no intentions of bringing back unlimited.

          • jw

            And AT&T and Verizon have something like 85% market share.

            Sprint & T-Mobile can offer unlimited data because they’re only dealing with 10 or 12% market share. They wouldn’t be doing it if the shoes were on the other feet.

          • Anonymous

            which will change… it simply has to…

            i’ve been inside the #1 telecom company up here, they are losing customers all over the place for so many different reasons, so if they don’t change to competitive forces in the market and world, they will go under,, whether it seems plausible or not…

            theres simply no way you can offer the things they offer without starting to also offer waaaaaaaaaaay more favorable data plans, all inclusive being one of them, that will happen, as wifi everywhere increases, they will have no other option, unless some legislative strong-arming happens, which would be disastrous for anyone implementing such laws…

          • jw

            It doesn’t have to change. Why would it?

            At no point in the near future will you be able to get a reliable, free wifi signal in rural America. In many places you still can’t even get a reliable wireless signal.

            The reality is that as wireless speeds increase & rival in home broadband, using a mobile device as a hotspot becomes a viable option for replacing broadband, which is why the telecom industry has done so much lobbying to control tethering & hotspots. Wireless enabled tablets can churn through gigs of data streaming Netflix & YouTube, which is the bulk of internet bandwidth consumption. AT&T & Verizon don’t want to cannibalize their in home broadband services (though AT&T DSL technically is no longer classified as broadband in all but major markets), nor do they want to inherit the Netflix or YouTube bandwidth. It’s more cost effective to run that traffic underground. So they stave this off with data consumption caps.

            At the very least, free/fast/reliable public wifi which would force AT&T/Verizon to open up their data plans is on the far side of national fiber access, which is still years away.

            Google Fiber & the FCC are the impetus for change here, not Sprint & T-Mobile’s unlimited data plans.

          • Anonymous

            Verizon and At&t are both showing favorable 4th quarters for wireless. Plus they just inhaled the majority of the spectrum in the AWS-3 auction. Even though T-Mobile is showing strong gains, they don’t have a real national network and until that changes At&t and Verizon have nothing to worry about. T-Mobile will need money they simply don’t have. So the future doesn’t like very bright.

            The wired side is not so great for both companies. But they truly don’t seem to care. Wireless is where the money is. Wired is a side project they can’t abandon fast enough.

          • jw

            AT&T getting rid of broadband would be a huge hit to their tv services… it’s a bundled product at this point. It’s not the money maker on it’s own, but it makes TV & wireless both more profitable.

            At least that’s how it seems to me.

          • Anonymous

            else theyll lock it up with corruption, collusion and mono market manipulation, and then we will all know, and it will be another box ticked of problems needing change…

        • Versus

          Those rates are awful. Do you know offhand what the defaults are for Internet / Wifi usage?
          Do they stay the same on the mobile devices?
          I assume they are higher on computers at least?

          • jw

            Spotify free is 160kbps on desktop. Premium has an option for 320kbps.

            On mobile, whatever your app is set to is what bitrate you receive, whether you’re using your carrier signal or a wifi signal.

            I believe on third party apps (wi-fi enabled stereo receivers, for instance) where there is not a quality setting, a premium account is generally required & the streaming rate is 320kbps.

            For what it’s worth, Spotify can only stream up to the quality of the file they originally received. And so when they upped to 320kbps, if they had originally received a 160kbps file from distributor, you’re only going to hear a 160kbps file on high (desktop) or extreme (mobile) settings.

            So the settings should probably be expressed as “up to 320kbps,” rather than just “320kbps.”

            Currently I believe that Spotify requests new releases as wav files (1411kbps), so new releases should all be 320kbps.

          • Anonymous

            Yeah most companies do now. Spotify is just an oddball using ogg vorbis.

      • Anonymous

        I get the impression that mobile carriers are really trying to stave off video streaming, & HQ audio streaming is just a casualty of that right now.

        nah, as i said above, already seeing unlimited data for a set rate, a low rate, and as technology advances, and with wifi being everywhere, as we see rolling out in all newer cars, its going to be game over, or game on, and streaming movies and sports and music everywhere all the time will take off, it already is…

        with home network systems where you can watch the hockey game on any device anywhere in your house and then have an app where you can do the same anywhere in the world, its only a matter of time before it happens…

        • Anonymous

          you should see some of the stuff… flooring that has power built in that transmits wirelessly to devices, soon there will be no wires, even for power, ish is going to get crazy soon enough if it already wasnt, the real question is going to be, will anyone be able to afford it all??

    • Chucks

      “If you have a 10GB family cap or a 2GB individual cap, which bitrate is going to be the most logical choice for you?”

      Uh, FLAC for music you care about and will listen to again, playlists downloaded on WiFi for offline listening. 160 or 96 kbps is fine if you’re just browsing around and want to see if you like a track or not. Bandwidth, not data caps are going to hinder streaming- unless it’s already been downloaded, you’re going to have significant buffer times before playing a lossless track or risk frequent interruptions when reception goes to less than optimal. Also, most people don’t care too much about lossless streaming on mobiles because you simply can’t tell the difference on an ordinary pair of headphones in a noisy environment where lots of people find themselves listening to music on the go (bus, plane, gym, noisy urban environment).

    • Sebastian

      I just keep mi hifi tidal stored in offline mode on my phone…. What’s the problem. Your whole argument doesn’t stand….

  5. Sarah

    Are they any different from Spotify from the artist’s perspective? Or are the only differences consumer-oriented?

  6. steven corn

    This is a very succinct and accurate description of the challenges facing the streaming industry. I might have added a 1(a) (which you alluded to):

    1(a): No streaming service has had a profitable year meaning that they are not self-sustaining and there is no sign of this changing in the near future. The stay alive through continued investment or unusual exits like Aspiro or Beats.

    However, if I were to start a list of why one SHOULD buy a streaming service, I can think of only one reason right now:
    #1: everyone is going to be using one sooner or later. (But that logic doesn’t go very far, of course.)

  7. Antinet

    As far as I’m concerned, it’s better to toil away promoting your music on college radio, bandcamp, maybe soundcloud, play live shows, and do other sorts of promotion, than risk giving away ownership in perpetuity to these jerks Spotify, and Pandora. There’s way to promot on Youtube without giving them the whole song. If people don’t like it, screw em, I have other ways to make a living even when touring. As far as whether it keeps me out of the zeitgeist, I think if that’s gonna happen, it’s gonna happen the same old way it did before these criminal organizations, word of mouth. If someone’s forced to pirate my material, then ok, at least my rights aren’t being managed by some overpaid tech douchebag (I’m one myself, but I don’t make money stealing other’s content.) It’s high time for mass shaming of people in these organizations. Anyway, blow me streaming. I’ll set up my own streaming channel, and sell merchandise or specialty packages. I’m done with these little turds and their content stealing jobs.

    • Anonymous

      As far as I’m concerned, it’s better to toil away promoting your music on college radio, bandcamp, maybe soundcloud, play live shows, and do other sorts of promotion, than risk giving away ownership in perpetuity to these jerks Spotify, and Pandora.

      if you own your masters, they dont take any ownership in perpetuity, its a non exclusive license that can be terminated, that gives them limited rights to rebroadcast the master…

  8. Anonymous

    one thing that just popped into my head, regarding greatests ever in music, is what happens to say rappers, as its pushed away from mainstream other then poppy features, where hardly any will ever be stadium worthy on the mass scale, similar to rock where now a Lorde wins rock awards and you never really see it anywhere on the show anymore, have we already seen the periods of where the greatest evers for rap and rock will be??

    I think those genres will be left to a short period of a few decades where the greatest evers will be discussed from, as the sales slow and the show doesnt hammer them, they will no longer carry the weight to be in the conversation, so i think we may have seen them all for those genres, which is just crazy when you think about it isnt it???

    With sport its all time, with music, it has to be tied to small periods where they could ship tonnage and sell out stadiums and win grammys, so i think weve kind of seen it, which is just real weird when you think about it…


    • Anonymous

      or furthermore, as majors invest less in those genres, as weve seen, as far as history and archiving goes, you never hear anything about any artist or band that wasnt on a major or with major esque pockets and pull, other then in the trenches where people know, so that would be like sports only remembering and glorifying those atheltes from say img management as opposed to someone else represented by a less huge and monopolistic agency, which thinking that way, is ridiculous, but music, thats the way it is, so we may have seen the snapshot of where our greats for rock and rap lived and existed, possibly never to ever see greats in those genres again…

  9. Alex

    Correct me when I’m wrong, but WiMP (respectively Tidal) is the service with the best usability – Unfortunately without a free plan. An awesomely great look and feel, very nicely curated playlists, interviews and last but not least displayed information about the writers, labels, etc. It can even do booklets! “The back sleeve sometimes is the front sleeve!”. Wimp provides the user with evident information of how and who was responsible of the music. Which other streaming service can compete with this (especially the last point)? Spotify will probably remain one of the big lions in the future, even though it will probably stay unprofitable for ages (also due to new offices for a couple of millions and travel costs (did I just say travel costs?))… , BUT (!) even though there are “the big ones” there is still a great blue ocean to ship in!

    People are spending more money on music than ever before and there are only a few services offering a streaming business model. Competition is vital! Remember how many businesses are competing in other industries? and its working… There will always be services who will do it cheaper and technically better, but if there are more than one the user is able choose which one will fit best!

  10. Sound Exchange

    For a digital music site, where is the coverage on Sound Exchange 2014 payout?

    It came out 2-3 days ago and many sites cover it.

    2011: $292 mil
    2012: $426 mil
    2013: $590 mil
    2014: $773 mil

    Unlike terrestrial radio, Internet radio is paying for the performance royalties. Record labels are hoping internet radio gains market share at the expense of terrestrial radio.

    it’s easy to see why.

    One is poised to pay $1 billion in 2015.
    The other is poised to pay $0 in 2015.

    • Remi Swierczek

      …and both can be converted to discovery based music stores.

      Sound Exchange could be one of the perfect suppliers of coded tunes allowing DJs to earn money also for the Radio station.

      Pandora would be legal and accessible to 7 billion, not just 340 million, folks and would generate over $10B/yr.

  11. Anonymous

    Spotify isn’t “profitable” by choice. Let’s not forget that, ok?

    There are some salient points raised in this article- however it’s to be expected that there will bandwagon jumpers every time a new tech is introduced.

    Probably wasn’t worth the minutes out of your life to write this, Paul. Love this site. xo

  12. Stefan Caunter

    Since 1998, it has been obvious that digital sharing would kill sales. Nothing but confirmation has happened since then.
    The record industry digitized in 1982. They profited massively from 1982 to 1998. Once people figured out sharing, they realized their problem. Suddenly, you have generations of listeners who will never pay for music. Never. Pay. For music.
    This is the world now.
    I don’t care how streaming services run their businesses. Musicians need to make money by in person connections with audiences. They cannot rely on digital for anything but promotion. People don’t share/stream/download stuff they don’t like, but this is just the beginning. If your music is digital, no one will pay for it.
    You can get paid by playing it live, or by selling analog recordings. Forget about ever getting paid for digital. Give it away now, and focus on other things.

    • VintageNewscast ClassicBlogger

      You’re right! Personally, I’d never pay for a CD anymore, but I do like paying for streaming service. I pay streaming services because of its convenient features and bells and whistles. I also believe that there is value paying to remove commercials; sometimes I’m just tired of hearing them.

      Also, your right, artists have always made the bulk of their money by way of endorsements, and performances; and that is how it should stay. The music industry are some really greedy MF, but that’s not the artist doing it, it’s the labels. The reality is, the music industry is just scrambling to keep their existence. They’re f**ked up practices and greed has caused this problem. Now people don’t see the value in music any longer.

  13. Name2

    Math quiz!

    What percentage of Paul’s points are based entirely on the premise of: “There’s the U! S! A! and the rest of the shitty world with their little insignificant markets.”

  14. Name2

    “Nobody cares about streaming fidelity.”

    — Paul Resnikoff

    “No one will ever need more than 640K.”

    — Bill Gates

    • Paul Resnikoff
      Paul Resnikoff

      Nice try.

      But I’m not saying consumers won’t be enjoying far greater fidelity in the future. I’m saying they will; it’s just that they’re not focused on it as a critical or even important part of their listening experience, at least above a certain level.

      And very few are making decisions to pay substantially more for substantially better audio quality. Some are, most aren’t. Which is what you called a niche.

      • Name2

        WIth DSL at home and a premium subscription you can load up all the music you want on your mobile app and listen offline. In a pinch, if you’re willing to put your device on a public hotspot, you can grab what you need.

        Since all of the major services offer offline listening, I’m guessing that “not having the mobile bandwidth” is a solved problem. Until, of course, the recording companies step in and say “Streaming only! No offline! THIEVES!”, which you will be able to just toss on the pile of stunts they’ve been pulling since 1995.

      • Sebastian

        I have no idea how old you are or how ignorant perhaps….higher fidelity in the future? How about in the past?!? streaming hifi might be a niche although a far bigger one you might think but high fidelity has been around a loooong time and ANY AND EVERYONE with any interest in music was interested in fidelity…. I opened up the closet as a kid and looked into 1000 records

  15. DrNue

    (11) Major Labels dictate their massive royalties up front…

    (12) Artist get paid almost nothing…

    Aren’t you writing about how streaming services are the rich bad guys who almost pay nothing to to the artist, all the time?
    But the majors get fat royalty checks? I don’t get it…

    • Paul Resnikoff
      Paul Resnikoff

      Streaming services made the deals with the labels, with their eyes open. They signed the contracts knowing that artists wouldn’t be paid, then blamed the labels for making them sign them. Get it now?

      For the wretchedness or SoundExchange, at least they constructed a payout protocol that attempts to avoid this problem.

      • Someone Who KNows

        And once again, Paul indicates his complete inability to reason clearly when discussing his favorite pet peeve – streaming.

        <q cite="Paul Resnikoff – Sunday, February 1, 2015

        Streaming services made the deals with the labels, with their eyes open. They signed the contracts knowing that artists wouldn’t be paid, then blamed the labels for making them sign them. Get it now?”>

        What part of all of the deal terms that labels have ABSOLUTE POWER and UNIQUE AUTHORITY to completely demand from steaming services do you think is NOT appropriate for those streaming services to blame the labels for, Paul?

        And again, as SoundExchange pointed out, above:

        But don’t let the fact get in the way. Just KEEP on screaming about how streaming services – which pay well over TWICE what terrestrial radio pays – “don’t pay enough.”

        …and artists wonder how they manage to get screwed so often, so easily.

  16. Airplay Music

    To build a profitable and sustainable business you have to solve the pains in the market.
    In the music market you can name 2 main pains.
    Consumers wants access to all music at a low price, best case for free.
    Artists wants to be paid for their music.
    Existing streaming services are thousand of miles away for solving both pains, and no sight for that ever will !

    • Paul Resnikoff
      Paul Resnikoff

      (1) Consumers wants access to all music at a low price, best case for free.

      That problem has been solved.

      (2) Artists wants to be paid for their music.

      That problem has not.

      • Airplay Music

        My point is that a streaming service have to solve both pains. Otherwise it is not sustainable.

  17. Lob Befsetz

    It’s all about the endgame.

    That’s what amateurs don’t understand about business. Jay Z doesn’t want to own and operate a streaming service, he just wants to leverage his fame to raise awareness and then lay the whole thing off on someone else.

    I’m sick and tired of entertainment people thinking they can compete in the tech game, as if it’s only a game, one can learn by observing, that there’s no skill involved and no experience necessary.

    Universal tried this at the turn of the century. They had their own ridiculous streaming service Pressplay and Jimmy and Doug’s Farm Club. As if tech were about show, and they could pull the wool over the eyes of the public the same way they refuse to pay artists royalties.

    But that is not the case.

    Yes, Jimmy Iovine ultimately regrouped and got Apple to buy Beats, a fallacious concept if there ever was one, Apple’s clueless when it comes to entertainment, why else would they approve the U2 cram-it-down-our-throats fiasco. But have you noticed Jimmy has failed at the second most important thing to him, after getting paid, keeping himself in the public eye?

    Jimmy’s disappeared.

    Entertainment is about fame.

    Tech is about changing the world. And becoming super-rich.

    And how do you get super-rich? Via scale. Coming up with something that EVERYBODY uses!

    That’s what the music business is lacking. The music business is now balkanized. Most people don’t listen to the same hits and this is a bad thing. It’d be like having dozens of operating systems in the smartphone sphere. When a company lends coherence to the scene, that’s when scale occurs and profits rain down. Instead, radio is running off into the ditch and everybody’s rallying around what once was, protecting their fiefdom, while Spotify scales and ultimately ends up with all the profits. Isn’t this why everybody now hates Tim Westergren? He lobbied users to contact the government to lower internet streaming radio royalty rates, then he took Pandora public and became a zillionaire and built a mansion.

    That was Tim’s plan all along. People were just too stupid to see it.

    And Jay Z is street smart. But to think he can compete with those who do this for a living is ridiculous. Sure, he made an impact in clothing, a wide open sphere, but what about champagne?

    And what Jay Z doesn’t seem to realize is there’s only one winner in tech. One Apple, one Google and one Amazon. Hell, this last quarter Apple put a dent in Samsung. And now Jay Z thinks he can compete with Apple?

    But Jay Z wants the money. Everybody in Hollywood wants the money. Disney, WME, CAA, DreamWorks, they used to be kings of the hill, now they’re also-rans in the money sweepstakes, which is what they really care about, art is a cover. So they’ve all got incubators and investments and it’s as laughable as sports stars becoming rocket scientists. Sure, it’s possible. But how many are going to do the work? And talk to Fred Wilson, investing is not something you learn in a week. But the press lauds the skills of Ashton Kutcher because he’s sexier than anybody who works at Kleiner Perkins, but they’re the ones who know, and are much richer.

    Jay Z is paying a huge premium. Aspiro has a business, but it only pays to pay this much if you can scale it.

    But Jay Z can’t.

    I’m not saying that Spotify’s victory in the sphere is guaranteed, although it looks that way. But Deezer has traction, Apple is yet to put its toe in, and can leverage its handset business, and Rdio and Rhapsody want some of that juice.

    And now Jay Z?

    It’s a winner-take-all world. To think otherwise is to believe that Bing can compete with Google on search, but the truth is Microsoft has lost billions on Bing.

    People only need one search engine. With everything just a click away online, people gravitate to the best. To displace someone atop the heap you’ve got to leapfrog them in technology, like Facebook did with MySpace, or deliver something heretofore unseen, as Google did with its search predecessors, with accurate results. What does Aspiro offer? CD quality streams. Which Deezer does too. And there’s absolutely no barrier to entry for Spotify and the other players, they can add high quality with the flick of a switch.

    But Jay Z believes he can leverage talent, which I doubt, Spotify exists quite well without the Beatles, and they’ve locked up Led Zeppelin, and get the hip-hop wannabes to subscribe.


    But then he’ll try to get Michael Rapino to buy it.

    But Live Nation just dismantled its Labs, which were the remnants of BigChampagne. Too many Live Nation acquisitions have failed.

    And maybe Jay Z can find a customer in Rhapsody or Rdio, which will pay him to use his profile, since they have none.

    But really, this is a sideshow.

    A sad one at that.

    One in which business trumps music. That’s all we’re getting from Jay Z recently. The Samsung/NBA/app album launch now this… How about one track that changes the culture?

    But those in entertainment no longer care about cultural power. They’re just into it for the money. And they see what the Silicon Valley titans have and tell themselves they want some of that.

    That’s right, once upon a time musicians were about changing hearts and minds, influencing millions.

    Now they just want those millions to hand over cash, so they can get richer, fly private to Davos, be a big mover and shaker.

    You become a big mover and shaker by writing a song that speaks truth that changes the world. Don’t try to be something you are not.

    A business MAN?

    How about being an ARTIST!

    “Jay Z Bids for a Swedish Streaming Company to Expand His Empire”: http://nyti.ms/18CqH6x

  18. KS2 Problema

    Audiophiles (real or the audiophool variety) do NOT buy Sonos speakers. Maybe for the patio if they’re having a party that afternoon.

  19. Maugarz

    Now if Jay Z brings that 19.99 to .99 a month we could be talking about a whole different animal here, even if he streams only Jay Z and Beyonce stuff. Think about it. @maugarz

  20. OK Olsen

    Lots of political observations here. All ‘interesting’.
    In the meantime, I have enjoyed my subscription to WIMP HiFi (now Tidal) for a year and a half.
    Good sound – great service: I really don’t care who owns it, as long as it gives musical pleasure.
    I believe the trick (as a user) is NOT to get ‘locked in’ (with equipment) to any standard as long as the fighting
    is going on. Then we can enjoy whatever digital platform we choose. And leave the fighting to
    ‘the greater forces’. New standards are popping up all the time. It doesn’t really concern me as a user.
    (Meridian has their MQA standard in developement. If it reaches ‘market saturation’ , it may become a future
    standard – bringing convenience anf Hi quality on ALL platforms. May I live to experience it).
    In the meantime: Live – listen & enjoy !
    Best regards. Ola

  21. Bastardo

    “People might say they care about sound quality. But the reality is that most do not, even if they own a pair of Beats headphones.” People who own Beats headphones don’t care about sound quality either.

  22. Truth

    Truth, is it your money? No
    So why in the #^}^{ fuck are you worried about Jay Z ‘s business deals. Get out of his pocket and worry about your own. Do you #>~{% what he eat’s. Yes, by the way there are plenty of people who care about sound quality. Especially those of us who work out in the gym, cyclist, and swimmers. GET A LIFE!!!

  23. Peter

    Here are two ways to improve Tidal..

    1. Disintermediate the record labels completely, cut out the middleman, and provide direct distribution for the artists. Then compensate them fairly. I believe that the record label industry will be phased out when they no longer provide any value for the artists.

    2. Merge with Roon and offer the top-of-the-line user interlace and integrated library functionality.

  24. Luke

    Man, I was just about to buy a music streaming service (Stream-Mart is having a 2 for 1 sale!) but I’m glad I ran into this article first. But now I’m not sure what to do with this $2 billion burning a hole in my offshore account! I guess I’ll do what everyone else is doing in an election year, buy a few senators and presidential candidates. Always reliable investments.

    Thank you Paul, as usual, helping me avoid a HUGE mistake!

  25. VintageNewscast ClassicBlogger

    I really think that it is extremely one sided, and even irresponsible on many levels to tell your readers never to pay for streaming. Because music is so personal, and valued at different levels according to the individual; who are you to tell someone what the should and should not do? I prefer to pay for streaming services, because I like many of the features and bells and whistles that come with my streaming service. As a true music lover, Youtube does not function in the same way as an actual streaming service. There’s no easy drag and drop, no simpler way of organizing, just to name a few. Not to mention that if I did use Youtube as a primary music source on my phone, the videos pull a lot more power on my phone that Rhapsody or Spotify. I don’t believe this author is a true music lover. I think he only listens to music once a year. For me, it is worth spending a couple of extra dollars to have ads removed, and save thousands of dollars for what I could have spent downloading all the music I have. However, I’m not going to lie, if the industry start some bull that they need to charge more, cause they want more money, I think that’s when they will see a surge in piracy they’ve never seen before. Well, technically Youtube is a form of piracy, illegal downloads isn’t just torrents.

  26. Martin

    I would not call OGG Vorbis 192 kbps bad quality. Indeed a far cry from lossless but I’ve captured several concerts (not comercially released on DVD) and played through my expensive hi-fi rig to incredible results.

  27. JustaBear

    High end speaker cables and Sonos player….high end ayyy lmao yo please stop. Or stop drinking coffee before you make these blogs.

  28. Chris M.

    Youtube has crappy audio quality is one of the biggest myths in the whole world and the world wide web. I was told by a retailer that youtube has poor audio. The key, to a large extent is speakers. I used a Bose multimedia system that plugged into my computer’s headphone jack. It also had a subwoofer. Now I have upgraded. The sound quality of youtube is not consistent across the board with all music – live can be spotty, but for the most part it is superb, especially if you are willing to spend a decent amount on speakers.

  29. Rickster

    If I like something I’ll just buy the (lossless-Ponomusic-flac) 24-bit-96-khz/192-khz, or CD, or LP and in that order, if I can afford it.
    So ya, I support musicians by purchasing their material.

    The ONLY “streaming” I use is the old “FREE” one, that’s been around since Nikola Tesla invented it. -It’s called OTA (analog-FM) Radio, it’s good enough for the car, bus, …
    Internet (digital) Radio is ok too, as long as it’s “free”.
    If you want to stream music, then stream your own HQ greatest hits, it’s as simple as that.


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