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Napster: ‘Streaming Will Never Become the Primary Medium’

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Analysts continue to warn that music streaming is unsustainable financially, at least without dramatic changes.  The question is what the top streaming executives themselves think about the future of their own businesses, and how this is ultimately guiding their decisions.

Enter the modern-day Napster, a now-European streaming service that is now saying things out loud.  “Music streaming will never become the primary medium,” Napster SVP Thorsten Schliesche flatly told the UK-based Inquirer in a recent interview.  

“Of course, it will be dominant, and will become more so over the next two years… but streaming will mainly be used as a means for discovery.  People will likely use services such as Napster and Spotify to make sure they like something before they buy.”

 

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The comments offers a marked shift in sentiment, and could reflect some level of frustration.  Napster, owned by US-based Rhapsody, is currently present in 16 European countries, though the company continues to suffer financial problems despite 10+ years in the marketplace and more than one million paying subscribers.   Part of the problem is Spotify, which is massively overshadowing Napster (and Rhapsody) with a heavily-free service.

One result, according to Schliesche, is that consumers have no idea what streaming is actually worth.  That is not a problem for downloads and physical goods.  “We definitely still have some consumer perception issues,” the executive continued.  “Based on what they have learned, there is a defined price for an album, so it’s easy for consumers to understand their value.”

“With streaming, on the other hand, people don’t know how much it should be, and this is why we won’t see mass market distribution.”

 

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Comments (29)
  1. FarePlay

    If streaming was about discovery, people would not be able to compile playlists and share them with friends, especially playlists that can include complete recordings.

    The majority of casual listeners will never dig through the millions of songs to find what they like, rather leave it up to a computer software program to shape their musical tastes. Those who will embrace these services for its’ seemingly limitless catalogue choices are the committed listeners like myself, who in the past have been purchasers of recorded music. BTW, will always be a “purchaser” as I’m sure others are as well; they’re just a lot less of us.

    These are the lost sales that will have a significant impact on an artists ability to earn a living from their work.


    Reply
    1. TuneHunter

      “Those are the lost sales…” I totally agree with you.
      In the era of internet discovery (the name of the tune ) equals total ownership.
      If we grow those creeps with all inclusive discovery services on board as it is today there is no way to monetize the music. 500 million subs at $4 makes just 24 billion ..and it will never get there – IMPOSSIBLE

      All streamers have to convert to DISCOVERY MOMENT MONETIZATION – no subscriptions required just modest fee for addition of orgasmic experience to your playlist – certificate of ownership included in price! Just give them a lot of those emotions – Echo Nest or great DJ on the Radio, let’ make money.


      Reply
  2. Anonymous

    cue the “discovery moment monetization” guy to chime in here.


    Reply
  3. GGG

    Um….is there any industry that uses the internet that hasn’t already started moving to cloud storage? Why would music distribution/ownership be any different. Obviously people will always want to buy something, but I highly doubt that will be digital files in ten years, and I highly doubt a physical product will overtake streaming.

    RE:FarePlay – I think you, and many others, really miss the point of what discovering means in this regard. When people champion discovery in streaming it’s not about digging through millions of songs to find what you want. It’s about when you see/hear about a band, or someone tells you about one, or you hear a song you like, you can check out immediately. The idea that it is there and readily available to stream and hear; with the alternatives being piracy or not buying it because why spend money on something you haven’t heard.

    I’m what you call a committed listener, as well, but even I’m not scouring Spotify for people I haven’t heard of. With the exception of an occasional “related artists” find, 99.9% of new-to-me artists I listen to on Spotify were artists I saw on a blog, or a friend told me, or saw them listed on a bill, etc.

    The argument of there being too much music for people on a service is one that needs to stop. It doesn’t make any sense. YouTube has millions of songs yet people still figure out how to listen to Justin Bieber and Lady GaGa a literal billion amount of times. If the functionality of a service is good/intuitive enough, it shouldn’t matter if there’s 100 or 100 million songs. You can find what you want.


    Reply
    1. Total Normal

      ggg : “why spend money on something you haven’t heard”, this is a valid point, and a lot of people think like that, but that point that has come to existence precisely with the habit of piracy. I don’t read a book before buying it, I don’t see a movie before going to the cinema… If I see a pirated movie on my computer, I am not going to go see it in the cinema, because I already have seen it for free. In that sense, streaming is not different from piracy; one could say that the streaming services have found a way to make “listening for free” legal. And people now expect their music to be free, just because it is.


      Reply
  4. G.D.

    This is posturing by Schliesche. Of course streaming is going to be the primary medium — as soon as streaming services exert the requisite torque on the majors, they’ll become profitable. They’re not profitable now, so they’re whining about the untenability of their business model. But once they’ve built market share, and won’t be long, they’ll have leverage at the table. And they’ll dominate physical retailing.


    Reply
    1. Erik P

      Just like downloads…


      Reply
  5. David Rosen

    Hahaha. Yea, OK Napster guy. Because there’s a reason to buy when you can play all you want from Spotify (and even save it as a playlist so you don’t have to go ‘discovering’ it later). I’m a self-hating musician because even though I create content, and still try to buy albums by some of my favorite artists who I collect, the vast majority of albums I just stream now. And I actually consider myself to be one of the rare people who “give a shit” … Imagine what everyone else is like.


    Reply
  6. PiratesWinLOL

    This doesn’t make sense. Why would I buy a song or an album, when I can stream it whenever I want? I got sonos all over my house, my smartphone and a subscription to a streaming service which enable me to listen to all the music I could possibly want, ever. What more could I wish for, when it comes to music? Certainly there is no reason for me to download some stupid file and make a mess on my computer or my phone. From a technological standpoint only streaming makes sense, and it the only thing that will be left, at least in developed countries.


    Reply
    1. mdti

      Most of the albums (CD) I bought recently were streamed on youtube for weeks. Then I bought the CDs.
      The question is not a question of money at all, but if one wants to access sound quality and support the artist directly.


      Reply
      1. PiratesWinLOL

        The sound quality is not an issue. Streaming services who stream in FLAC already exist for people with golden ears and a very, very expensive stereo set. Wanting to encourage your favorite band with a donation of money, is obviously a nice and reasonable thing to do. However, I don’t think you have to pollute the earth with some utterly useless plastic discs to do so. Just ask them to set up a paypal account for donations.


        Reply
        1. mdti

          CD pollute much much less than buildings full of severs, electricty supplies, air conditionning to keep it cool, etc etc. Streaming generates much more pollution than any physical format.


          Reply
        2. mdti

          Drop-outs when streaming music, be it mp3, flac, or whetever, is indeed a big issue and an annoyance to say the least. Nothing beats a physical format for overall quality (which includes having no drop outs or need to connect to the net).


          Reply
    2. mdti

      So, the answere to your question is “because they want to”
      and it is a matter of favorising quality, or ethics for some people.


      Reply
  7. Maugarza

    Bulshit I doubt spotify will exist in 2 years period. This all streaming robbery will come to an end soonest than we all expect.


    Reply
    1. Casey

      And what is going to end it? The major are all for it. As long as the majors are all for it, it is staying around. The indie’s can drop out in droves and few people will care.


      Reply
  8. Blake Carpenter

    This is my two cents…

    We are still in a transitional state as an industry. Eventually someone will crack the technological and consumer code, with the right business structure and make it easy for the consumer and profitable for business for people to buy music once again. It all comes down to product. What will come next?

    Of course for this to play out, the consumer is going to have to motivated and educated enough to actually click that buy now button or pick up a copy of music. Instead of trying to fix a broken system, we should be trying to create a whole new one.

    Companies should be trying to develop technology that and a product that gives the consumer something new. That is the only way people will buy something. As far as a consumer being motivated, i believe that the general population does not have the excitement that they once use to have for media. Thats the fault of the industry in my opinion. There has to be a new spark ignited in the buyer for it to work. All that comes with counter culture and a movement that directly involves a large group of people. With no counter culture or voice, the consumer will never be excited to listen to music. Nothing new and exciting has popped up in the last decade. Some people will say EDM, but that has been around since the 90s.

    How about we give people a fresh new sound, born from a new counter culture. Then we release technology and product that is far better than what is out there at the moment? That wouldn’t “fix” the problem but it sure would be a step in the right direction.


    Reply
  9. barry

    Streaming isn’t going anywhere whether subscription or free… music needs to adapt.. Take a look at the IM AF formats being introduced.. New technology and evolution of music.. Music is a sustainable culture. Try to sustain and not shame.


    Reply
  10. River Waters

    The problem is not consumer behavior really, but overabundant production. The oversupply of readily accessible and easily copied recorded music drives prices down. The spigot is wide open and Spotify has grasped one of the bigger handles on the spigot.

    If prices paid to vendors are to increase, the spigot must be narrowed and/or the supply must be limited. Records were perfect. Their physical nature limited both production (because of the costs involved) and their proliferation (because they couldn’t be copied readily).

    No business model will change the laws of supply and demand.


    Reply
    1. Average Joe

      I am a college-age music fan. I go to live indie shows when I can but mainly consume my music from various streaming services (Pandora, YouTube, Rdio, Spotify, Grooveshark, etc.). I can tell this group – that the Schliesche guy and the rest of you buying music are not the mainstream audience. Me and my friends are. And, I can tell you …. brace yourself for a dose of reality…that not one of my college or highschool friends have EVER paid for a digital download. The last time I bought music, I was in middle school (I was and 12 and the song was “In the End” by Linkin Park). Other than to check out Apple’s music service, I cant even remember the last time I thought about going to iTunes.

      Now that so many of the on demand services are free (Spotify, Rdio, YouTube, Grooveshark, etc.), I can summon almost any song I want, at any time, for free. I dont need to “own” music. Never did, never will. Not only is streaming the future, it is already the past and the present. So wake people and face the facts.


      Reply
      1. hippydog

        and when you get older what then? when you have kids are you going to buy them a pad or “tab” or some wi-fi enabled music player and tell them to “stream” their favorite music?
        and then on your first road trip with them with no wi-fi what then? Are you going to tell them how you “got” the free music? “well dear, mommy and daddy stole this music just for you”..
        ;-)


        Reply
        1. Average Joe

          Are you kidding me??? When I have kids, digital streaming will be the only option. Look around – in car wifi and digital streaming in public places are more than a reality its already ubiquitous. My generation is not concerned with ownership or handing down 45s to my children. Times have changed, sir. Technology is moving at the fastest pace in recorded history. In fact, how soon before digital streaming is the >85% of the music market…2-3yrs? How soon before >95%…5yrs? You need to wake up and deal with what’s in front of you. I dont have the answer on how best to monetize but stomping your feed and demanding I pay money for a song that I can listen to for free on Spotify is not viable solution. Adapt and survive or at least get your head out of the sand.


          Reply
          1. GGG

            Hit the nail on the head. And I think you bring up/allude to a few important points.

            Number one being your generation (I’m only a few years older, but right across the gen gap I think) really doesn’t care about ownership. (in the consumer sense, no like rights holders) Older folks like the idea of a record collection, I liked the idea of a CD collection, and I STILL like the idea of having my personal collection in iTunes. But, as you say here, and I’ve heard this a lot from younger people, it’s just not in your blood to consume like that. Maybe a vinyl collection, but you’re not going to buy everything on vinyl.

            So this is why I argue so much about banding together to fight for better pay for streaming, as opposed to fighting streaming. As much as people may hate what you say, how you say it, feel like you seem like an entitled brat, it really doesn’t matter at all because you are an example of the average music consumer.

            People really need to understand desire and reality are usually VERY different things.


            Reply
        2. The Nipple King

          I’m not sure kids in 10 or 20 years will even understand the concept of “stealing” digital music. They don’t now.


          Reply
        3. Veteran Talent+Buyer++Promoter

          I have wifi in nearly every location I’ve traveled. I have unlimited data with Verizon streamed into my car. How long before that reaches market ubiquity?


          Reply
  11. Willis

    Maybe the music industry needs to employ the services of a medium to determine the primary medium. Minidisk, anyone?


    Reply
  12. Veteran Talent Buyer / Promoter

    I have not purchased a physical cd in over six years.


    Reply
    1. TD Walker

      I have not bought a CD since early 2000s and will never buy one again. As for digital downloads, I was good with streaming services but my wife still preferred radio then buying music on iTunes…probably around $100 per year. Until, we got Spotify. Since getting Spotify, she has not bought a single download. There is no need. We recently cancelled our subscription and are quite happy with their free on demand service. Also, I agree with Average Joe, the majority of Spotify’s casual users will never “buy” music again.


      Reply
  13. dazed & confused

    Either Schiesche is a complete buffoon, or he’s under the mistaken belief that he’s going to dissuade more competition from entering the space. I just don’t believe that he really believes this. Why in the WORLD would anyone want to buy/own music when they can play any of it anytime and anywhere they want?


    Reply

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