The FCC Just Shrunk the Music Industry

FCC Kills Net Neutrality
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The FCC just murdered net neutrality.  And that’s probably bad news most of us in the music industry.

If you’re Apple, Amazon, or Google, this doesn’t really affect you.  In fact, the dismantling of net neutrality will probably help platforms like Apple Music, Amazon Music Unlimited, Google Play Music, and even YouTube.

And the reason is pretty simple.  Those companies have billions in their war chests to pay for ‘fast lanes’ and ‘prioritization’ from ISPs.  And the US Government just handed them a way to use that money to outpace their competition.

Everyone else — including those heavily reliant on outside investment — should be extremely nervous right now.

Spotify Says the Government Should Protect Them from Apple & Amazon

Advocates for the dismantling of net neutrality say this makes the internet better and more robust.  But those ‘advocates’ are usually the ISPs themselves, or legislators receiving hefty donations from those ISPs (and here’s a fun list of exactly how much those legislators received from access providers).

Broadband access providers are not in business to make less money.  They want to make more money — billions more money — and they’re not shedding a tear if your business suffers because of it.

Or, if your highly-leveraged streaming platform doesn’t quite deliver the Wall Street multiple you wanted because of elevated access charges.

That’s right: the smart analysts on Wall Street are taking a fresh look at promising web-based platforms like Spotify.  Because you can now add ‘broadband prioritization fees’ to the list of recurring overhead charges.

Report Confirms That Spotify’s Valuation Has Increased To Well Over $19 Billion

Spotify just lowered their notoriously onerous royalty obligations to the major label conglomerates.  That was a big, big win that took years to achieve.  But now, they may have to hand some of those gains back to a different group of elephants: Comcast, Charter Communications, Cox, and numerous other US-based ISPs.

Other struggling streaming companies, particularly Pandora, TIDAL, and Rhapsody, could be saddled with unmanageable fast lane charges.  And who knows what this means for other platforms like Bandcamp and Patreon, not to mention your self-hosted site.

Of course, Comcast doesn’t want to put any of those companies out of business — after all, a dead company can’t pay for fast lane access.  Better to kill them over time, and maximize the long-term return.

As for Apple Music, Amazon Music Unlimited, and the Google music properties, bring it on!

These companies will demand ‘most favored nations’ payment terms with other streaming providers.  Because as long as rivals like Spotify aren’t getting a discount, the entrenched corporations win.  The war of attrition favors the richest companies, not the best ones.

But fast lanes don’t really matter, right?

Study after study shows that speed absolutely matters when it comes to customer retention, conversion, and overall experience.

But this is not just ‘fast vs. slow’.  Amazon has found that milliseconds of latency can change a customer’s decision process.  Abandonment rates clearly increase with every millisecond of delay — and any serious site owner or platform operator understands that.

So, let’s ask ourselves: how would a de-prioritized class of streaming services fare?  What if Spotify, TIDAL, and Rhapsody are suddenly slower?

Spotify is notorious for analyzing every detail of its music streaming and cacheing delivery process.  That’s right: obsessive tech-geeks have made Spotify a better service by ironing out every delivery issue.  Their CEO is from uTorrent, after all.  And they’ve been in this space for nearly ten years (yeah, tech experience matters).

So what happens to all that meticulous work when Apple can just buy faster access?

I have no idea.  And I don’t think Spotify does, either.  But this definitely doesn’t help anyone that isn’t a mega-billionaire corporation.  In fact, every ‘smaller’ app, site, platform, or service that isn’t a billion-dollar behemoth should be extremely concerned about the repercussions ahead.

Meanwhile, don’t expect surging consumer demand for streaming music and other online music experiences to diminish.  But the number of companies that can effectively meet that demand could decrease.

And you can thank the FCC for that.




16 Responses

  1. Versus

    Perhaps unduly optimistic, or trying to make lemonade from a lemon, but..

    Might it not be good for musicians, if it’s used to prioritize access to legitimate stores and music streaming services, and de-prioritize piracy and scam sites?

    • Gordon Gekko

      You just never know. It might just turn out to be a good thing in the long run. Hey, maybe streaming and downloads will become so expensive that we’ll bring the CD back and musicians will be back in business! lol. We can dream can’t we? haha

    • BABA

      There will be plenty of people (including me, if I lived in USA) that won’t be satisfied with only iTunes/Apple Music, Amazon etc. I buy most of music using Bandcamp, it’s a beautiful platform that always provides good quality audio and is known for it’s awesome name-your-price system. I love Soundcloud despite it’s low streaming quality, because it’s the best way for me to find new artists and discover their music. What are the chances of giving these services the same priority that the giants will have?

      And as for piracy – This decision doesn’t solve anything. I would rather say that piracy could gain more popularity due to people willing not to pay more for services that allow legal content distribution.

  2. Joseph K

    It’s funny to read so many people collectively shitting their pants about “net neutrality”, like you dumb fucks even know what it means or what happened today with the FCC. You freak out about everything and read all the same news sites because you’re a bunch of fucking sheep.

    • kk

      Agreed. Some people argue that it’s better under the FTC umbrella.

      Having said that, Spotify and anyone else that isn’t Apple, Google , Amazon, will suffer from this decision. AS they are already disadvantaged , they are now even more!

  3. Tony Gottlieb

    In 1985 a single Megabyte of RAM (yes 1 Megabyte), was $5,000. Today you can buy a 32 Gigabyte thumb drive for $4.99.
    The Internet and digital bandwidth are NOT a zero-sum-game and net neutrality is a Faux-issue.

  4. Big Government=Less Freedom

    All this doom and gloom will be sussed out by the ‘free’ market. Most people will not notice any difference. The good thing is if you want to pay more you will be able to get higher speeds.

    I’m all for less government in our lives and in our businesses. For the most part big government ruins everything they touch. It’s astounding to me, how many liberals are okay with big government. You should read Friedrich Hayek’s ‘The Road to Serfdom’ The book warns of the danger of tyranny that inevitably results from government control of economic decision-making through central planning…… something not taught in our schools today.

    • Paul Resnikoff

      If you are against ‘big government,’ then consider just how many legislators are being directly paid and lobbied by entrenched ISP interests. Doesn’t sound like a move to smaller government at all.

      • Anonymous

        Hahaha! I think he meant the other kind of big government. You know, the bad kind!

      • TonyGottlieb

        Ah yes, Because they don’t want a repeal of the DMCA safe harbor. It turns every recording musician and content producer (including you) into an impotent beggar.

  5. Benny

    Net neutrality is bullshit. It’s a way tech companies have controlled and domintated for decades. I LOVE IT that tech companies will now be challenged. Maybe disrupted?

    It’s time tech companies get a taste of what musicians have been going through… disruption. Let’s hope!

  6. Mayor of Realville

    News flash. For the entire history of the internet people and organizations who want more speed have always paid for it. It’s called bandwidth. This changes nothing. Calm down everyone.

  7. wmcgurn

    yes, mean ISP’s will slow down streaming services. so a three minute song will take 4 mins to play? WTF? they may force the bit rate to be lower (and lower the quality), but if they slow the music stream down all music will sound like the Chipmunks reversed…………#not science

  8. Faza (TCM)

    It’s refreshing to see the comments on this article.

    Here’s the thing: the Title II classification was only in place since 2015 and was a present handed by the previous administration to Google, Facebook and the rest (anyone who wants to can easily establish just how cozy the Obama Whitehouse was with Sillicon Valley).

    The sky didn’t just fall down. The internet isn’t “broken”. It’s business as usual and it’s highly unlikely anyone will notice.

    Unless they happen to have a huge video delivery platform and they want to keep delivery costs to end users down… can anyone say “YouTube”?