Amazon Prime Music Takes Another Baby Step

If you've been following this blog for any length of time, you know that I've been saying all along to watch out for Amazon Prime Music as the next big disrupter in the streaming music space.

Why? Prime Music is part of the popular Amazon Prime subscription service that already has a reported 75 million subscribers (although Amazon isn't saying just how many). Amazon is also dabbling in its own record label, and is generally getting into the mainstream music distribution waters one toe at a time.

Well, maybe two toes, as the company recently dropped a few new nuggets of what might come next.

First of all, T-Mobile must added Amazon Music to its data-free music streaming program called Music Freedom. This is the first instance of Prime Music being available to off-the-platform users.

What might be more an indicator of the future is the fact that Amazon just made it's Prime Video service available as a stand-alone product for $9 a month. For $11 a month you could also buy the full Amazon Prime membership complete with Amazon Prime Music and 2 day shipping (which is more expensive than just paying the $99 a year fee for the same thing).

Although this last move has little to do directly with Prime Music, it's another baby step in the direction that we inevitably know Amazon will take. Don't be surprised if there's a big announcement about a free-standing Prime Music service in the next few months.

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Samsung To Close Milk Music Service

Don't feel bad if you haven't heard of Samsung's Milk Music service - not many people have. Even though the company launched Milk Music to great fanfare a couple of years ago, the service managed to gain little traction since.

That's why Samsung has decided to shutter the service, according to various reports.

Milk Music was originally meant to be a competitor to Pandora that would play exclusively on Samsung mobile phones. When phone users mostly ignored it, Samsung then opened it up online, then brought it to their smart televisions as well.

In 2014 the company launched the Milk Video version of the service specializing in short form videos as part of a greater media strategy that included sports and an advertising platform. Needless to say, that failed to gain traction as well.

Actually Milk Music did gain some users on the free tier, but the company wasn't able to upsell them to the paid premium tier, which is a continuing problem with many other platforms as well.

This just goes to show that just having deep pockets doesn't guarantee success of a music streaming service. Look for more smaller services to either shutter or be acquired soon.

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Big Changes In Music Sales This Year So Far

Nielsen's mid-year music sales report is out and a lot has changed in a mere 6 months. Here are some of the highlights.

• On-demand streaming from services like Spotify is up 92.4% over last year! Over 135 billion songs have been streamed so far this year. Yes, this streaming thing is definitely catching on. 

• Vinyl sales continue to rise at an ever greater rate, up 38% over last year. Vinyl albums now comprise almost 9% of all album sales.

• Digital track download sales are down 10.4% from last year. The bloom is off the rose.

• Digital album sales are virtually flat though, which is good news considering that last year they were down 10%.

• If you add in the new ways of looking at albums in the digital domain (track equivalent albums = 10 and stream equivalent albums = 1500), total album sales are actually up 14% over last year at this time.

• CD sales are down 10%, which is decreasing at a much slower rate that anticipated and slower than we've seen in previous years.

• Physical album sales are down at traditional big-box retail, but up 0.6% at indie music stores, and up a giant 18% at non-traditional vendors like online, at the venue, and direct-to-consumer.

What do these numbers prove? Music is still not only alive and well, but demand and consumption is growing. What we don't see in the Nielsen report is the revenue numbers, and that's where the actual tale is told. We have to wait for the end of the year for that.

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Like A Coiled Snake Spotify Strikes Back At Apple Music

If you thought it was a coincidence that Spotify released new and much improved subscriber numbers directly after the big Apple Music announcement at its World Wide Developer Conference, then you haven’t been paying attention to what many are calling the “Streaming Wars.”

At least in the short term, Spotify is still the market leader in the interactive music streaming space, and the company did its best to put an exclamation point on that fact by providing a lot of new information, strategically waiting a day for the Apple Music furor to die down a bit to steal a little thunder for itself.

At the end of last year, the company touted 60 million total subscribers, with 15 million of them paying the going rate of $9.99. That number far outpaced its closest rival in Deezer, with only 6 million paid subscriptions, and others like Rdio and Tidal that fall below the 1 million mark.

But Spotify’s new user numbers show a striking increase in a short time, with the company announcing it now has 75 million users, of which 20 million are now paid subscribers. This makes the company a major player even when compared to the non-interactive streaming side of things, as Pandora only sports 79 million total users, with the vast majority of those using the free tier. 

While user numbers are solid proof of growth, another part of the same announcement may be even more important. The company also reported another round of funding for $526 million, which places its valuation at around $8.53 billion (keep in mind that it has yet to turn a profit). 

Among the partners that invested in this round include Swedish telecommunications firm TeliaSonara AB and Abu Dhabi’s sovereign wealth-fund, so there are some deep pockets with a large stake in the company’s success. Read more on Forbes.

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Spotify Looking To Add Video Streaming

Reports are that Spotify has been reaching out to top YouTube content creators and traditional media companies in an attempt to accrue content for a new streaming video feature. Although no specific date for the launch has been officially announced, many believe it will come by the end of the month.

The feature is said to be free and will take advantage of the existing advertising infrastructure that the company has set up for its streaming music service.

Spotify recently raised another round of investment said to be around $350 million on the basis of a total valuation of $8 billion. Speculation is that the introduction of video played a large part in raising the cash.

While it's difficult to make money with streaming music, video streaming (even if it's free) is another story, as more and more brands expand their advertising in that area. Of course, YouTube hasn't done too badly with that model either.

Another reason why Spotify might be going that route is from pressure brought by other streaming music services like TIDAL and Google Play, which also offer video. That said, Rdio also tried a video feature but abandoned it after 6 months.

Spotify also sees the upcoming competition from both Apple's new music service and from Google's Music Key, and views adding video as the best way weather the storm of their launches. That's also why we'll probably see a Spotify video launch sooner rather than later.

Whether the streaming service's new video feature will actually gain traction is another story.

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TuneCore Acquired By Believe Digital

Digital music aggregator Tuncore, one of the pioneers in that area of the music business, has been acquired by Believe Digital for an undisclosed amount. Believe is the French version of Tunecore only larger, operating in 29 countries.

Both companies will reportedly retain their current staffs and continue operating as normal, but will now be owned by a new corporate entity called Tunecore & Believe Digital Services.

The new company is now a heavyweight in music aggregation, reportedly responsible for 25 to 30% of all uploads to iTunes every day.

This merger may turn out to be a significant upgrade for artists currently signed to Tunecore.

Tunecore company stresses services more for the DIY artist who does everything for himself, while Believe is known for its artist hand-holding. The company features departments for marketing, radio promotions, and project management - all the services usually provided by a record label.

Of course, those services are all for hire, but just the fact that they're available is a step in the right direction for many artists that don't have a clue what to do after they finish recording and uploading their songs.

Usually mergers and acquisitions like this are to the detriment of the end users. This time it may turn out to be a giant positive for artists and bands everywhere.

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Will Vessel Video Service Make The Same Mistake As Tidal?

Even though many in music hate to acknowledge it, YouTube really runs the music business these days. Multiple studies have found that most discovery of new music online is the result of YouTube, and that the percentage of use increases as the age demographic gets younger.

For that reason, YouTube is a big target for new and existing music services alike. Every entrepreneur wants a piece of those total eyeballs. The problem is that many focus on the wrong part of the equation in an effort to get a competitive edge.

Vessel is a new video network started by two former Hulu executives and backed by Amazon's Jeff Bezos to the reported tune of $75 million. The service hopes to lure users away from YouTube (especially millennials) by giving its subscribers exclusive access to videos not found anywhere else online for a window of up to 72 hours in return for a monthly fee of $3.

The company seems to be basing its success on a strategy of attracting high quality creators by offering them a better deal than they're currently getting anywhere else. This includes 60% of the subscription fee and up to 70% of the advertising revenue for a video that's released on Vessel before another service.

According to the Wall Street Journal, this means that the revenue could go as high as $50 per 1,000 views, a figure that soars past the $6 per 1,000 paid by Vevo and $2 per 1,000 paid by YouTube.

The generous terms has lead to partnerships with Warner Music Group, A&E Networks and YouTube multichannel networks Machinma and Tastemade, according to a New York Times article. Read more on Forbes.

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Soundcloud And Warner Music Make A Deal

Soundcloud has been trying to become more than just a way for artists, bands, and DJs to showcase their music, and the service took a big step forward yesterday with a new licensing deal with one of the major labels in Warner Music.

The deal means that Warners and Warners artists (hopefully) will get paid anytime someone plays one of their songs on the platform. This includes any of the very popular DJ mashups that the service is becoming noted for.

Warners will also take a cut of the ad revenue generated, as well as a cut of the revenue from Soundcloud's yet-to-be-introduced subscription service.

On top of that, the Wall Street Journal reports that Warners will also get a 3 to 5% stake in Soundcloud as part of the deal.

What the Warners deal does is legitimize Soundcloud in the eyes of other labels and in the investment community, allowing the service to raise additional capital and make the next major label deals a bit easier. For artists, it means that they'll finally get paid if someone plays their music on the platform (providing they're signed to Warners, at least at the moment).

On a related side note, I always suggest that people use Soundcloud if they want me to listen to their tracks. It's so much more convenient that sending a file.

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Album Sales Hit A New Low

The album is definitely dropping in popularity, as last week Nielsen SoundScan announced that the sales numbers reached their lowest levels since the company began tracking data in 1991.

Only 3.97 million albums were tallied, the first time that figure has fallen below the 4 million mark ever. Considering that 3 albums debuted in the top 10 and averaged only 31,000 units doesn't bode well for the format, as more and more music lovers abandon the album and move to streaming.

CD sales are down 19.2% from last year at this time, with the big retailers taking an even bigger hit. Mass merchants have fallen 23% while the big chain stores have fallen more than 25%. You can see that it's only a matter of time before there will be no longer be an album brick and mortar retail business.

With this kind of data, you'd think that artists and record labels alike would begin to change their business model and concentrate more on singles, but that doesn't seem to be the case. Artists still seem to think that it's still an album world and spend way too much time and money in that area.

But the evidence keeps on clearly pointing to the fact that consumers don't feel the need to purchase an album or even purchase music at all. And it looks like the trend will only continue.

Maybe the new Apple/U2 album format (whatever it is) will make a difference, but that's still at least 18 months away. By then, after the world becomes very comfortable with streaming, it might be too late.

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Getting Paid For Soundcloud Plays

Soundcloud has made the ultimate move of monetizing the platform by deciding to introduce advertising on the platform for the first time, it was announced recently. The good part about this is it gives artists a chance to actually get paid for their streams just like on YouTube.

Until now, the company derived its revenue primarily from Pro accounts, but as of August 21st the company introduced a new strategy designed to give users new tools for uploading and tracking engagement, growing Soundcloud's audience, and introducing adverts into the platform.

Soundcloud will implement a new partner program called On Soundcloud that provides a brand new Premier tier, which is invite only at the moment and includes advertising from 5 different components - native (not sure what that one is yet), audio, display, channel sponsorship and contests. The first five sponsors are Red Bull, Jaguar, Sonos, Squarespace and Comedy Central.

What's interesting is that Soundcloud doesn't have signed deals with the major labels in place yet, but has decided to launch anyway. That said, the company is said to be in talks about the agreement, and expects to have something in place by the time it rolls out its new subscription service. For the moment, the program is only available in the US.

Bottom line - Soundcloud is trying to become an audio-only YouTube, and having a revenue model in place in order to pay artists for their participation goes a long way to that end.

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The iTunes Store Shows A Hint Of Panic

There’s talk coming from various sections of the music business that Apple’s iTunes Store will soon offer high-resolution tracks for sale, and that the introduction might coincide with the future release of three Led Zeppelin masters. The unconfirmed details have the hi-res tracks in their full 24 bit glory encoded using Apple’s lossless audio coding, and priced a dollar more than the current lossy AAC tracks.

Mastered For iTunes To The Rescue, Maybe

The fact is that Apple has been accepting 24 bit tracks at up to a 96kHz sampling rate for more than a year now in their Mastered for iTunes program (called MFIT within the industry), but the final encode for the iTunes store was still done at the lossy AAC resolution, although they sounded better due to starting with a higher quality master.

Supposedly, the hi-res track launch is in response to the fact that Apple is seriously concerned about how quickly download sales are diminishing, with Nielsen Soundscan’s Q1 report finding that downloads have diminished 13.3% over the same time last year. Apple missed the boat when it launched iTunes Radio, thinking that it was a way to increase download sales instead of realizing that people stream because they don’t want to purchase their music anymore. Now it’s faced with sales falling far faster than anyone ever anticipated as streaming gradually takes over the music delivery space.

But offering hi-res tracks might be only a temporary ace in the hole for iTunes, record labels and artists alike. It doesn’t cost the company extra to offer hi-res tracks, since most are already delivered that way, and it increases the per track revenue. The only problem is that the majority of buyers probably aren’t interested in the higher fidelity in the first place, and would rather pay the least amount of money possible if they choose to make a purchase at all. Then the fact of the matter is that many pop-oriented tracks aren’t recorded that well to begin with, or use distorted samples or loops that probably won’t provide much of a difference in the end for the average listener. Buy one hi-res track that doesn’t seem worth it and you’ll probably never buy another again. Read more on Forbes.

Streaming Up And Downloads Down This Year So Far

Soundscan's sales numbers are out and it's no surprise that the same trends that we saw at the end of last year continue, only more so. Digital and physical sales were down while streaming was way up, and the hits are doing better than ever compared with the bottom of the charts.

Here's a look at some of the most important numbers:

• Digital Sales - down 13.3%
• CD Sales - down 21% compared to this time last year
• Interactive Streaming - up 35%
• Streaming Royalty Rate - up to $.005 from $.00375 last year

Even though sales are down, streaming royalties seems to be making up for the decline, which is something that was predicted would happen. In fact, if this trend continues, music industry revenue could actually rise slightly by the end of the year.

Albums continue to take a hit as well, with digital albums down by 14.2%. In fact, all genres of music posted a decline except for electronic music, which posted a modest 2.7% increase in sales.

The music business continues to evolve and the switch to streaming continues at an increased rate as consumers warm to having access to, rather than owning, music. With several new streaming services about to be introduced, it will be interesting to see if the trend accelerates even more.

The Rapid Rise Of Digital Music

Digital music has become a huge part of the global recorded music income, now bringing in just over a third of the total, according to the latest IFPI report. Here's a chart from Statista that shows how rapidly the sector has grown over the last 10 years.

As you can also see, downloads still make up more than half the digital music income, although expect that to decrease and for streaming income to increase in years to come.

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Follow me on Forbes for some insights on the new music business.

You should follow me on Twitter and Facebook for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

More People Are Listening To Internet Radio

If there's any doubt about the popularity of streaming music, a new study by Edison Research should put it rest. The survey of more than 3,000 people age 12 and up about their online music consumption definitively proves that streaming has truly arrived. Here's what the study found:

• More than 80% of smartphone owners said they listen to some kind of Internet radio on their mobile gadgets. 

• A majority of Web users -- 53%, to be precise -- listen to Internet radio outlets, including personalized streaming, live online audio and music on-demand.

• Slightly more than two-thirds of those surveyed said they listen to more online radio than they did a year ago as they access content on more Internet connected devices. 

Surprisingly, that doesn't mean that terrestrial radio is losing listeners though.

• 90% of the survey participants still listen to terrestrial stations. 

• Almost 9 of 10 people listen to radio in their cars, but only 17% use Internet radio.

Expect to see these rates rise shortly as more users turn to iTunes Radio and Beats Music and the new YouTube music streaming services are introduced.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

Follow me on Forbes for some insights on the new music business.

You should follow me on Twitter and Facebook for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.