Major Labels Strike Spotify at the Knees With ‘NOW!’ Streaming Service

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Time to cut out the middle man and reap the benefits?  Now that’s a good idea!

Across the Atlantic, two of the big three labels are planning on launching a brand new music streaming service in the UK.  The service will be known as “Now That’s What I Call Music!” which you might recognize as the long-running hits compilation series.

This will be a joint venture between Sony Music and Universal Music Group, who own all the songs that will be in the service.  The same songs that Spotify is negotiating to use, while these same labels constantly deny longer-term licensing deals that are critical for a Wall Street public offering.

No word on Warner Music Group, though they might join shortly.

So exactly what this hits-focused streaming service?  According to The Guardian, both major labels are finalizing an app called Now Music+.  Unlike the other major players in the music streaming service, Now Music+ will only feature playlists of hit songs.

The price? £4.99 a month, which comes to be around $6.60 here in the States. The price will go up to £5.99 if you purchase the app through the App Store for your iOS device.  The app will currently be limited only to the UK, but two insiders told the Guardian, ““this may change in the near future.”

This move is unsurprising, as streaming revenue has pushed the Big 3 labels to higher revenues.  Despite this, however, the Big 3 are still pushing to be paid out even more, forcing companies like Spotify to offer very poor revenue payouts.

We’ve recently covered how many streams it would take Nelly to pay his IRS tax lien. The pressure by the Big 3 labels have put a strain on Spotify and Apple Music’s profitability, though at least Apple can afford it.

Amazon is also reportedly working on their own service which will allow them to stream their own music through voice-powered Echo speakers.  Speaking with the Guardian, Ted Cohen, who’s a managing partner at TAG Strategic, said,

“We are moving away from one-size-fits-all subscriptions. There is a certain spoken and unspoken imperative by all the rights holders to make the pie a little bit bigger.”

One huge con against Now Music+ is that it will not allow users to listen to all music on-demand.  Now Music+ will only offer a limited catalog, but streaming is seriously top-heavy when it comes to catalog.  Meaning, an enormous percentage of streams go to the biggest hits anyway.



Top ‘Now’ image by Artem Popov, licensed under Creative Commons Attribution 2.0 Generic.

14 Responses

  1. John Drefahl

    Wait, is it 2001? This just getting surreal now… Should we start the SDMI meetings up again?

    John Drefahl
    * Disclaimer: Let it be known that I work for Pandora. But the thoughts and comments I make here are my own, and do not reflect the views of my employer in anyway.

    • Anonymous

      Well, to be fair, it was the division of Sony that makes PlayStations that ran SMU, not Sony the record label. Not that this will fare any better.

  2. Adam

    This post. And the one written when it’s shut down is all we’ll ever hear of this service.

  3. Troglite

    I seem to have a diffetent take than most of the other DMN commentors.

    This doesn’t have to compete with the leaders in the $10 all you can eat subscription marketplace (Spotify, Apple Music, etc). It just needs to be viable enough to encourage expansion of the marketplace to more limited subscription or pay as you go platform. By creating competitive pressure, it will help accelerate or sustain efforts in that space. It will also help maintain leverage with these all you can eat market leaders, who all depend on their ability to license the huge catalogs owned by the major labels. Those catalogs remain the best way for the majors to shape the transition to the new post-digital music industry.

    Microsoft did something similar with tablets a few years ago. Apple innovated. By releasing their own tablet, Microsoft forced partners like Dell and HP to match their efforts. This helped them catch up with Apple, especially in the corporate tablet workplace.

    • Sarah

      I don’t think this venture will amount to anything (they’re removing the biggest selling point from other streaming services, which is that you can get virtually any song on them) … but I agree with you that it’s good in terms of both experimenting with different consumer offerings and increasing competition..

      • Troglite

        To your point, the pricing for this seems unrealistic when discounted AYCE subscriptions from spotify and apple go for roughly the same price.

        Your comment inspired a more concise expression. As is often my style, some exaggeration has been added to emphasize the point. 🙂

        I’d rather see a startup offer 1 cent a month subscription to a top 40 playlist for any single genre than a $10 subscripton that claims to have everything. At least you’d have a rational model you could tweak over time to reach an optimal price point that would support a true usage-based payout to all vested parties. At least you’d maintain adequate control through a fixed inventory. At least you’d preserve some income diversity instead of discouraging download sales. When emerging artists, indies who want to preserve control of their works, and exclusives are taken into account… no subscription will have everything. Its a lie. And the idea that anyone can have everything for one flat fee is only a marginal improvement in consumer attitude when compared to the “everything is free” mantra of piracy.

  4. Anonymous

    Why pay for this with its limited functionality when for a few bucks more you can get the whole enchilada?

  5. Ric

    We all know what innovative marketers the labels have these days, so it will be interesting to see what campaigns will be developed to entice the consumer into buying these tracks when they can get them for free in a few other places.

    I doubt people are going to pay to stream the now brand, buying a cd is another matter,

  6. Antinet

    Why can’t someone start a streaming company with ONLY unsigned artists? There has to be a market for customers who want to be on the cutting edge of the newest of the new.