2013

Sonos' MacFarlane on near-term issues for streaming music services:

9.99 is not a mass market price point, somehow (bundling, discounts, pricing innovation, partnerships etc) that price must come down to drive wider adoption. Also the value chain must work out a transparency solution that can work within the restrictions set by commercial relationships. Artists may never get the full picture, but it is in the interest of all parties that they get as much of it as is possible to help them make informed opinions. Finally, the elephant in the room remains YouTube. More catalogue than any of the other services, video (of course), great functionality, on every smartphone and tablet, and all for absolutely nothing. That creates a playing field that is anything but level for the rest.

Let’s break that down.

He thinks the $10/month price point is too much for most people. I believe that only about 20% only ever bought CDs regularly, meaning that these are the folks for whom $10/month is a natural investment. This price point would only make sense for 1/5 of the market.

On the other hand, I don’t think the $10 is a show stopper for people beyond the hardcore 20%. I think the friction to maintain a paid account is the problem. The 80/20 rule says that only about 20% of people can be bothered to log in. It’s not coughing up $120/year that’s the problem, it’s all the little hassles.

He thinks musicians need to get real actual numbers on what they stand to make from Spotify et al. Right now these payment deals are secrets between the labels and services. I can’t see this happening. The best that players will get is to start seeing decent paychecks.

Finally, YouTube YouTube YouTube.

He’s right. And not only for the reasons he gives, but because you don’t have to log in. The $10/month vendors are all competing for the 20% who can be bothered. YouTube wants the 80%.

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