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Barry J. Holmes / Warner Music Group
Over the past few years, nearly every conversation about the challenges facing artists in the music streaming economy has suggested one quick fix. Milana Lewis, CEO of distribution and payments platform Stem, said: variety Last summer, “Everything on the planet is getting more expensive, and we keep finding new ways to make subscriptions cheaper through family and student plans, bundles, and other initiatives. Apple Music, Amazon Music, Deezer.” has already done so, but everything else is still $10/month where it started.
Warner Music’s new CEO, Robert Kyncl, brings an opposite perspective to the top of the music industry. At paid music subscription service — and Netflix, he oversaw the company’s transition from DVD to streaming.
Shortly after Spotify live-streamed its two-hour-plus “Stream On” conference on Wednesday, it announced a series of new initiatives, but without an increase in U.S. subscription prices. Kyncl gave a talk at his Morgan Stanley. No wonder such a price increase was one of the main topics of discussion. Without naming his Spotify, the world’s largest streaming subscription service, Kyncl said the inflation-adjusted price for an individual monthly streaming subscription is $13.25 instead of $10.
“I think music is underrated, and I think the market is underrated,” he said. “This is not my opinion. Take the US for example, a user pays to consume an hour of music is half what a streaming service pays for a movie or TV show. I don’t count expensive cable TV, just streaming, which means it’s 50% underrated today.
“How did this happen?” he continued. “Streaming subscription pricing was established in the United States in 2011. [approximately] $10 per user per month. Some are up, but he should be at $13.25 today after adjusting for inflation. Additionally, family planning was introduced in 2014, effectively lowering ARPU to an average of $7. Now it’s $7 instead of roughly $13.25. ”
After acknowledging that low initial prices are essential to restarting an industry whose value has been halved by illegal file sharing, and that some services are starting to raise prices, he said: . And in effect, we are the lowest form of entertainment that can be monetized. I would say the exact opposite. Music is actually the highest affinity entertainment, better than movies and TV shows. , and has the lowest hourly rate – that doesn’t seem right.
“It’s up to us, the industry as a whole, DSPs and labels to find new models that increase the value of music while growing our business.”
He admitted that he’s only been in his new job for a few months, but gave one factor in what the new model might look like.
“For example, if a subscriber starts a session with Lizzo, she should get her own multiplier. [stream total], because Lizzo basically brought users to the platform. This is valuable for the platform. Content isn’t everything, but if she’s starting consistently long sessions, she’s a consistently long session generator.
“After a decade of incredible growth and industry challenges, we need to be positioned in a new way for the next decade,” he concluded on the issue.
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