Sunday, May 12, 2013

Can iRadio Save The Music Business?

iRadio logo image
Word leaked out last week that Apple has finally come to terms with Universal Music regarding a licensing deal for their new streaming iRadio service. They also are reported to be inching closer to a deal with both Warner Music Group and Sony Music, although Sony still seems to be the toughest of the bunch to hash out an agreement.

It's also been rumored that the terms of the deal is much more favorable to the record labels in that it would pay more per stream than Pandora, plus the rights holders would get 50% of any ad revenue generated by Apple's new iAd business, which is still in its infancy.

iRadio is potentially a huge opportunity for artists, songwriters and record labels alike in that the audience from streaming will increase by multiples the minute the service is launched. One of the problems that everyone on the creative end of the business has at the moment is that the payout from streams is so abysmally low. That's like saying that you're not making enough money when you only play at largest venue in a small town in Iowa. There are plenty of fans elsewhere in the world if you can only get to them, which would increase your revenue.

Though both Spotify and Pandora have seen significant increases in total users, it's still a drop in the bucket to what Apple can potentially deliver. With iTunes now available in 119 countries (the App Store is in 155 and more than reaches 90% of the planet - and each one spends an average of $40 per year!) and more than 500 million active users, artists can look forward to a boost in revenue simply in terms of the increased audience that represents.

Will the revenue streams of the glory days of the music business be revisited as a result? Unless some new ideas in song bundling (an album is a song bundle, but now outdated) come along, probably not, but artist's are going to see a definite improvement on those meager streaming royalty statements over time, and many will be quite pleased with the result.

iRadio is going to do for streaming audio what iTunes did for music downloads, which is turn it into a viable business for content creators, this time by virtue of its installed user base. Google is said to be readying a similar music service to be launched later in the year through YouTube, and that competition can only be good for streaming in general.

I've talked and written much about Music 3.0, which was more about the music business embracing digital music and the artist socially connecting to his fans. Right before our eyes we're seeing it evolve into Music 4.0 - the age of streaming.


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