Wall Street Is Totally Unimpressed With Streaming Music…

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“A flat line for U.S. streaming subscribers is quite a worrying signal for music industry investors.”

Seeking Alpha analyst Pim Keunsler.

It’s been a rollercoaster for Pandora on Wall Street, but IPO hopefuls like Spotify may never get to ride.  And one huge concern for traders and investors, according to sources to Digital Music News, are soggy numbers around paid subscriptions.

In the US, streaming subscriptions rose a scant 2.5% to 8.1 million in the United States during the first half of this year, according to recent stats by the Recording Industry Association of America (RIAA).  Billboard has pointed to the cancellation of Muve Music as one possible explanation, though it’s unclear whether those 2+ million heavily-bundled subscriptions were solid revenue contributors in the first place.

Meanwhile, Apple Music is threatening to woefully under-deliver, with early intelligence suggesting initial paid subscribers in the low millions.  And Spotify, while surging towards 100 million total users, is showing less-than-spectacular gains on the paid side.

“…my general bullish outlook for the sector might be at risk.”

All of which has Wall Street nervous about the state of the music industry.  “A flat line for U.S. streaming subscribers is quite a worrying signal for music industry investors,” Seeking Alpha analyst Pim Keunsler wrote.  “I even consider music streaming growth the most important argument to invest in music-related stocks.  The most recent report by the RIAA indicates that my general bullish outlook for the sector might be at risk.”


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There are deeper problems, according to insiders.  The biggest issue right now is happening in Paris, where a problematic Deezer is trying to go public.  As part of its IPO filing, federal law mandates the filing of financial and company data, a move that is exposing some serious issues with the world’s second-largest streaming service.  Chief among them is the lack of actual ‘subscribers’: according to IPO filings, roughly half of Deezer’s claimed 6.34 million subscribers haven’t even accessed a single song in the last month, while only 1.54 million are paying full fare.  “This could be ugly,” one major label executive observed.

Actual ‘subscribers’ are also an issue at Spotify, where a large percentage are paying discounted or introductory rates (we just don’t know how many).  But more pressing for Spotify are renegotiations with the Big Three major labels, all of whom are renewing right now and demanding heavy licensing costs.  Those deals, according to sources close to the negotiations, may also include ‘gated content,’ which means limiting content for free-access users, something Spotify has fiercely resisted.

But even if Spotify maintains its freemium, ad-supported tier intact, its major label licensing deals are unlikely to be renewed for more than one year, according to sources.  All of which puts Spotify’s IPO plans in an unhappy holding pattern.


Image of female brown bear by Tambako The Jaguar, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).

12 Responses

  1. FarePlay

    Do you ever get tired of the tech world telling you they have a solution that’s going to work FOR EVERYONE. SHUT UP AND ADAPT.

    Just think about it. Three guys, the two founders and Sean Parker, from the predatory world of piracy came into the music business convincing a scared industry to make a bad deal for the labels and the artists they represent. Gutting the sale of paid downloads and CDs and offering their innovative service for free in the process.

    Only to find out that nobody wanted to pay for it.

    Ever since Napster, thank-you Parker, the music business has been in a downward tail spin.

  2. What?

    Pandora – the only streaming company that is actually trading – is at a 6 month high, on the day you posted this nonsense.

    • FarePlay

      What? Yes, what. Would you like to share their P&L with us and explain where they will get the money to pay for all that pre-1972 music they been streaming for free, illegally.

      • What's The Point?

        Not that it has ANYTHING to do with the point but, the pre-1972 recordings make up, at a maximum, less than 5% of Pandora’s total streams.

        The headline is “Wall Street Is Totally Unimpressed With Streaming Music…”

        And then goes on to talk about rumors, on speculative IPO dreams.

        I think the point was that we only have one streaming company that is actually ON Wall St., at the moment, and Wall St. seems to be fairly impressed with them, at the moment.

    • izzy84

      LOL yes – Pandora, a great example of the future of the business. So…

      – their entire model is under serious threat and for good reason
      – oh right, they aren’t profitable
      – and nothing trades beyond what it’s worth right? Oh wait, the entire market – for the last few years.

      maybe they can rely on Next Big Sound to save their business…a social metrics data company…

    • Paul Resnikoff

      A rollercoaster typically has huge highs and lows. Here’s the definition:


      3. of, relating to, or characteristic of a roller coaster.
      4.resembling the progress of a ride on a roller coaster in sudden extreme changeableness.

    • Paul Resnikoff

      A rollercoaster typically has huge highs and lows. Here’s the definition:


      of, relating to, or characteristic of a roller coaster.

      resembling the progress of a ride on a roller coaster in sudden extreme changeableness.

  3. Nelson

    I’ve been telling anyone that would listen about this issue for years even started a blog MusicCapitalist.com to go over in detail how, what and why the record business works. The bottom line is that Physical music never went away, So the headline that it’s back only reinforced the very deception that has been playing out right in-front of our noses.

    Namely the Majors are getting the USA to entertain our economy to death. the 1st part was to convince their biggest competitors the indies or (90%) to compete in the smallest pool of sales, Digital is 47-42 precent of sales any given week. So now that 90 precent competes for the 40% of which streaming is the worst and every media outlet in the world repeats the lie that started in part 1.

    Now to part 3. If we don’t have physical music we don’t export it. Mean while the rest of the world is climbing over themseves to get into this market*. Since I’m the CEO of one of the Indies’ that does DigitalPhysicalGlobal.com distribution I get to see music coming and going and believe me there is more coming in then going out. In fact in the trade category where this is counted we exported -397 YOY see USMadeMusic.org for more on this.

    So now that we’re not exporting our ability to earn money from music has been neutered and the mean while Congress sleeps on the US Music Act (www.musicact.org) which only ensures that we don’t every get our act together and allow the haliburtonization of one of the only businesses that the US actually invented, Recorded music. …

    PS to make my point about the sorry state of journalism on this subject. Two weeks ago, two of the top records in the USA we’re placed into the market by a German company and no one in the press covered it, they also announced that icons Alabama and Janet Jackson are releasing their next records. That German company happens to be BMG and that means that we now have 4 Majors and there’s no news about this.

    Does anyone thing that a German, Japanese or French companies care about the USA. Or any of their releases will be made and exported out of the USA.

    PSS there are still posts everyday that claim physical is dead and that streaming is savior of the record biz. Well it ain’t never has been take it from someone trying since 1994.

  4. iLeonD

    As a streaming is the future of music collections. Pandora and Spotify are not the issue. YouTube is the issue. There has to be a way to satisfy all parties involved.

  5. Anonymous

    Duh. Streaming will never be profitable until piracy and free tiers are dealt with. This isn’t rocket science.

  6. Remi Swierczek

    Even 1/2 billion of LOYAL SUBSCRIBERS does not make music industry. LET’S STOP NOW!

    To have 500 million folks you need to be in Kenya and Kazakhstan and your AVG global sub will go down to $2 a month – just take a look at AppleMusic and $1.57 offer in China. Current USA subs AVG. below $5.

    Net result of 500M x $24/yr = $12B makes totally WRONG BUSINESS MODEL 500 million will never happen.

    In the meantime we can convert 100,000 Radio stations and all fashionable streamers to $100B discovery based music store before 2020. Many good IPOs to follow.