If music streaming services want to survive, then original content may be the answer.

Written by Daniel Burns

      Jimmy Iovine is an American record producer who founded Interscope Records in 1990.  In 2006 he and rapper Dr. Dre founded Beats Electronics. Apple bought Beats and their just off the ground music streaming service in May 2014 for $3 billion dollars. Apple then turned that service into Apple Music and still continue to make and sell Beats products today, but with an Apple accent. I recently read an article from The New York Times written by Ben Sissaro interviewing Iovine on leaving Apple. And it was what he said about the music streaming industry that got me thinking. Music streaming services need something to set them apart from each other and, at the moment, they are all pretty much the same. Iovine outlined a central problem with streaming services today calling them utilities.

    “And the streaming music services are utilities — they’re all the same. Look at what’s working in video. Disney has nothing but original stuff. Netflix has tons of original stuff. But the music streaming services are all the same, and that’s a problem.”

    What he said is what I hope other streaming services pick up on loud and clear. Music streaming services need exclusivity and original content to survive. Much like Disney and Netflix have original content they produce for themselves. As we know with original content in video, it draws people in and creates a loyal fan base of viewers who come to watch exclusively on a platform for a certain show or movie. But with music, all the services pretty much have the same catalog of artists and albums to choose from. Aside from special exclusive releases, it all ends up on all the services eventually. You don’t see a Netflix made show on Amazon Prime Video and you will probably never will. So what’s stopping, let's say Apple or Spotify from doing the same thing? The only thing comes to mind is record labels and contracts with artists. If Apple would sign artists to do exclusive content just like they do with TV+, then I think they would succeed over Spotify by bringing in more loyal listeners. It wouldn’t be very hard for them either. Apple has had a way better track record of having good relationships with artists versus Spotify. If you remember the Taylor Swift pay rights debate, Apple responded. Spotify has been in deep water before by paying artists less on their service compared to Apple. This isn’t just happening with streaming tv video, the online streaming gaming community is seeing this happen with Amazon’s Twitch competing with Microsoft’s Mixer. Mixer picked up an exclusive deal with previous Twitch streamers Ninja and Shroud in hopes to attract more subscribers to its new service. To some degree it has succeeded. Iovine highlights the biggest problem with growing a music streaming service.

    “It doesn’t scale,” Iovine said. “At Netflix, the more subscribers you have, the less your costs are. In streaming music, the costs follow you.”

    Even with a healthy growing number of subscribers the same pay rate per play, due to contracts and equal opportunity deals with artists and record labels, doesn't go away unless the actual service, like Apple, were to sign with the artist, produce and record in house, and release their song or album exclusively as original content. Apple has some very smart people working for them and Spotify does too. So one day I suspect this will happen. In fact, this will need to happen to keep rates the same and to make music streaming more profitable. This also applies to Spotify's growing podcast service in competition to the gold standard, Apple's stand alone Podcast app. Whether or not this leads to tiered pay levels of service remains to be seen. But something has to be done and the name an Apple Music Original doesn’t so sound crazy.

Quoted WSJ Article

Follow Daniel Burns on Twitter, @DBurnsOfficial

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