Back when Disney+ began its meteoric rise, there was a whole lot of considering round what classes the music streaming market might study. Three years on from the launch of the subscription video on demand platform, the shine has come off it a bit, registering its first ever subscriber loss, however not earlier than turning into a significant market participant and altering the best way wherein the business thinks about growing streaming reveals. Disney+ was a part of the ‘big bang moment’ of transformative change within the video streaming market. Meanwhile, the music streaming market principally stayed the identical. This might have been tolerable throughout its time of loads, however now, with international music streaming income progress wanting set to have dropped to 7% for 2022, the shortage of change leaves music streaming weak in a time of shortage. Never has there been extra want for change and innovation. Disney+ would possibly nonetheless simply level us to the trail ahead.
There are many weaknesses within the Western music streaming market which can be well-known and that don’t should be relisted of their entirety right here, however there are three that stand out above all others (and to be clear, we’re speaking in regards to the providers facet of the market, not the remuneration facet, which we beforehand coated right here):
Unlimited, ungated entry to the whole lot, in all places
Minimal differentiation (catalogue, pricing, worth proposition, and many others.)
A fandom void
Meanwhile, video streaming has lengthy offered a ‘sliding doorways’ view of what music streaming might have been if licensing had been finished in a different way initially:
Catalogue segmented throughout totally different providers
Wide number of worth factors and worth propositions
Ability to focus on niches
Strong ARPU progress attributable to customers having a number of subscriptions
But, simply as music has been hit by financial shortage, video has much more so. Expecting customers to have a number of subscriptions (almost three quarters have two or extra) would possibly fly in a time of loads, however as family budgets tighten, the enterprise case out of the blue appears weak. Cancelling one video subscription is a comparatively pain-free resolution. It reduces alternative, nevertheless it doesn’t imply shedding the whole lot. By distinction, the overwhelming majority of music subscribers have only one account, giving them entry to the whole lot. Music streaming’s distinctive worth for cash is turning into a recession-busting asset that the TV business could also be with envy at this stage.
It is all about progress
So, with all this stated, why might there nonetheless be classes to study from Disney+? The easy reply is: progress. With subscriber penetration topping out in mature Western markets, music rightsholders and streaming providers solely have worth will increase as a practical progress driver in these markets. But, if a brand new, further service was to launch, then a really actual probability of ARPU and income progress arises. To be clear, now wouldn’t be the time to launch it (for the exact same causes that Disney+ simply misplaced subscribers). But now could be the proper time to plan and construct, with a view to launch as soon as the worldwide financial system returns to full well being and client purse springs loosen. The problem, after all, is how you can construct one thing that may ship real additive worth when all the opposite DSPs have already got all of the music. Here is a imaginative and prescient for the way that exact circle may be squared.
Introducing music+
Let us name this idea ‘music+’ for now. Music+ must be one thing that’s totally different from, and complementary to, the mainstream DSPs, when it comes to each content material and worth proposition. It would wish two key elements:
Community and identification: As MIDiA recognized final yr, scenes are the brand new progress alternative for music and fandom. Fandom itself is solely a symptom of identification. Music has lengthy performed a vital position in speaking and shaping identification. But Western streaming providers are audio utilities that sacrificed fandom in favour of comfort. There isn’t any significant manner of speaking identification. This is why TikTookay is the place that music fandom occurs within the West, pushed by gen Z, who sought one thing extra significant than the comfort that was so valued by millennials. So, music+ would have group and identification at its core. User profile pages can be the core asset. A spot the place customers can say who they’re, what music they like, the place they will join and talk with different customers, curate radio reveals, submit playlists, and many others. They would additionally show listening badges (e.g., “I am in the top 5% of fans of…”) and digital artist merchandise, akin to badges, limited-run digital paintings, and many others. NFTs might but show to be the way forward for artist merch, however proper now it lacks the essential ingredient – context. Buying merch is about speaking identification. User profile pages can be the trophy cupboard for digital merch and collectibles.
Content for followers not customers: Streaming has commodified listening, even for music aficionados (half of whom stream passively). Music+ can be a spot for aficionados (20% of all customers), the place followers go to deep dive on their favorite artists and join with likeminded followers. Artists would supply content material, akin to classes, cowl variations, sneak previews, limited-availability stay streamed concert events, Q+A classes, images, and many others. That would supply a lot of the content material, however much more would come from followers themselves. Aficionados are 4 instances extra doubtless than common customers to lean ahead and create content material. Leaning by means of to create is the last word expression of fandom, and TikTookay has confirmed the use case. So – and that is the place issues get controversial – music+ would wish to function beneath a user-generated content material (UGC) license. The overwhelming majority of music’s present UGC platforms (YouTube, SoundCloud, TikTookay) adopted the ‘do first, ask for forgiveness later’ method. Music rightsholders would wish to embrace, slightly than tolerate, UGC as a way to energy the creation of a completely new music catalogue. Their incentive can be to drive slightly than reply, by seeding the platform with content material, akin to artist sound packs and stems.
Music+ wouldn’t be a mainstream proposition, however that’s completely the purpose. It can be an additive proposition for followers. If priced at a modest value (say $4.99) and bought sufficient help and enter from artists and rightsholders, then it might have shot at growing a content material library that might ship actual worth to followers, and in doing so, plug the fandom gap that Western streaming has by no means appeared to have the ability to fill.