Digital-Music-Report-2014

More discovery, more from mobileA few years ago depth and volume of catalogue were keybattlegrounds among digital services. Today, with major servicesoffering up to 37 million tracks, competition has shifted torecommendation and discovery. Francis Keeling, global head ofdigital business, Universal Music Group, says: “To fully engageusers, services need to provide a well-curated experience.Music fans love to discover new music, and digital services needto be experts at music recommendation.” Streaming servicesare particularly focused on developing a mobile-first offer andincreasing scale through ISP partnerships.With smartphones now the primary point of internet accessfor many people, Spotify recently introduced a free mobile tierwhich aims to encourage more users to engage and ultimatelysubscribe to the full Premium service. A new ‘Discover’ featureoffers enhanced recommendations as well as playlisting. Spotifyalso introduced the Browse editorial pages, which curate playlistsby mood, genre or news item. Spotify entered 38 new marketsin 2013, including Argentina, Hong Kong, Malaysia, Mexico,Singapore and Taiwan, as well as countries across EasternEurope. The service is now live in 55 markets and has a payingsubscriber base of more than six million.Ken Parks, chief content officer at Spotify, believes musicsubscription has hit a tipping point. “This is the way peopleare consuming music, so the debate about whether it’s amodel to embrace has been put to rest over the last year.Unlike the distribution of physical product we can reach everyperson on the planet, at least every person with a smartphone.It opens up huge opportunities in the developing world, wherecountries have leapfrogged fixed line internet and gonestraight to wireless.”“This is the way people are consuming music,so the debate about whether it’s a modelto embrace has been put to rest overthe last year.”— Ken Parks, SpotifyAlready present in more than 180 territories, Deezer hasfive million paying subscribers, 12 million active unique usersand partnerships with mobile operators across 31 territories.CEO Axel Dauchez says good editorial is vital to bring throughnew acts and meet the long-term needs of the consumer —both of which are critical for the long-term future of the musicbusiness. He says Deezer’s focus on editorial — with emphasis oncurating new, domestic repertoire through a network of editors— is a compelling point of difference. “Being a jukebox solves theshort-term need. But in the long run you have no differentiationversus your competitors or piracy. If you want to thrive it cannotbe a market of what you already know, but helping people buildtheir own musical identity by cracking the discovery process.”“If you want to thrive it cannot be a marketof what you already know, but helpingpeople build their own musical identity bycracking the discovery process.”— Axel Dauchez, DeezerGoogle Play Music All Access was the fastest-growingsubscription service in 2013. Having launched the subscriptionservice in the US in 2013, Google Play Music now has threecomponents — the Play Music Store (à-la-carte downloads),Scan and Match (locker) and now All Access (subscription) —live in 21 countries on four continents by early 2014.All Access is designed to work seamlessly alongside theexisting Google Play free scan-and-match locker service thatallows users to store their existing music library in the cloud andstream it remotely or access it offline from any Android or iOSdevice. Zahavah Levine, director of global music partnerships forAndroid, says the rapid take up of Google’s smartphone operatingsystem has driven the success of Google Play as it provides easyaccess to a massive global smartphone audience. “Subscribersare the best music customers we have. 120 dollars a year issubstantially more than the average user spends on purchasingtracks. Relative to the industry’s overall revenue, subscriptionrevenue is still a small piece but it’s growing fast.”Beats Music, an offshoot of the consumer electronicscompany owned by Dr Dre and Jimmy Iovine, launched itssubscription service in 2014. CEO Ian Rogers believes the paid-forUS music subscription business is achieving only a fraction of itshuge potential. “There are 100 million people paying for cableFigure 10: Total paying subscribers worldwide (m)281382010 2011Source: IFPI estimates2020122013will.i.am photo by The Bridge18