Sony Says They’re Questioning the Value of Free Streaming Services

Sony Music CFO Kevin Kelleher, discussing Taylor Swift’s pull from free streaming services:

“Actually, a lot of conversation has taken place over the last week in the light of that… What it all really comes down to is how much value are the music company and the artist getting from the different consumption methods.”


“The key question is, are the free, ad-supported services taking away from how quickly and to what extent we can grow those paid services?… That’s something we’re paying attention to as content owners who license our content to the different platforms. It’s an area that’s gotten everyone’s attention.”

In 2009, TechCrunch reported that Sony BMG owned 5.8 percent of Spotify.Sony has also made licensing deals with YouTube’s new streaming service, which has free and paid tiers.

10 Responses

  1. Bob

    There was a similar article in WSJ with Universal quoted as wondering whether free was a good idea.

    It shouldn’t be lost on anyone that the same article mentioned that many of Spotify’s label deals are up for renewal right now. In other words, this is probably just public posturing by the labels in order to gain advantage in the negotiation. It’s **highly** unlikely that any of them will pull out of the Spotify free tier. More restrictions? Perhaps. But removal? No chance.

    • Paul Resnikoff

      This could be simple posturing, though the winds are blowing a bit differently on Spotify’s IPO or liquidation prospects. Previously, the plan was to grow Spotify as fast as possible, with Wall Street and/or giant acquirers favoring size over profitability.

      These days, there’s a bad hangover on Wall Street on inflated, profitless companies like Pandora, especially when the beneficiaries are just a few guys at the top like Tim Westergren.

      Add a bunch of high-profile blow-ups into the mix (thanks Taylor), and the game starts to get complicated. Majors made a nice random on Beats thanks to ownership shares, but that was/is a paid-only platform.

      To be continued…

  2. Anonymous

    “are the free, ad-supported services taking away from how quickly and to what extent we can grow those paid services?”

    I think we all know the answer by now:

    Free streaming just didn’t work, and it’s time to move on.

  3. Willis

    I’m sure they are also still thinking about partnering with Napster, also.

  4. Anonymous

    Streaming services are still an unknown to many many music consumers. “Free” entices them to try it, provided they can even figure out what “it” is. Once enough of them get hooked on the platform, you can place limits on “free” and increase subscription rates. And I imagine that’s what the plan is. But do that too soon and you risk never getting people to try the platform to begin with, even if you do get a short-term bump in subscribers.

    The challenge right now is how to convince more consumers to move to streaming. Educate them about how it works and why it’s better (for them) than ownership.

    Once subscription rates increase, then per stream payouts should increase. More streams + higher stream payout = fitter, better, happier artists. In theory anyway…

    • FarePlay

      It’s not about education. It’s about limits and boundaries. If the labels force Spotify, etc. to move in this direction it might actually save these marginally legitimate services.

  5. Johnny Gagnon

    Hey Justin your right on about much of what you said,but it wasn’t the previous generation who been doing anything with the global economy…… an old Chairman of the House Banking Committee in the early 1900’s said this about the way Bankers are handling the economy: Federal Reserve has impoverished and ruined the people of the United States,have cost the country enough money to pay the national debt many times over … through corrupt practises of the moneyed vultures who control it ….
    He was talking a bout zionist European Bankers operating in North America , these economic problems have been going for a long time and as long as they have had their filthy hands on all the global market economies …. it’s how they keep control and keep everyone in society on economic dog – slave leashes while sit high on the hog … don’t blame The People – Blame the Zionist Global Banksters and their mafias!

  6. Anonymous

    Does Sony’s streaming service on Playstation not have a free tier? I thought it did. Maybe that was Xbox Music instead.

  7. Dan McNay

    These free streaming sites are built on the backs of musicians art. They have never had the right to use it “free” in the first place. It’s only a matter of time before this all changes and the are all put to rest. They don’t pay propper royalty rates to artists, nor do they really promote anything that isn’t paid for by a label. When is the last time you went in to Starbucks thinking they would just give you a free cup of coffee? If you are an artist, or affiliated with an artist, do everything in your power to rebel against these leaches. Because we all know, that’s what they are. I think we all need to go back to making records again. If they want their free pop culture, they will only get the middle finger.