May 19, 2020

The Rise of Digital Music Subscriptions

Spotify
Omnifone
Rdio
Sony Music Unlimited
Bizclik Editor
4 min
The Rise of Digital Music Subscriptions

 

Written by: Jeff Hughes, CEO, Omnifone

 

It’s no secret that the music industry has undergone huge growing pains over the last decade in the shift from analog to digital. The record labels and publishers have struggled to protect their catalogs and properly compensate their artists, without alienating the fans who got used to downloading music for free. As a result, the rights owners have had to find new revenue streams in order to adequately monetize their creative assets.

Right now, digital revenues are the fastest growing part of the music industry. CD sales continue to fall as more and more consumers look to cloud-based services for their music. 

The number of music tracks streamed increased 700 percent in 2012 with 7.5 billion tracks streamed in the UK alone, according to Universal Music[1].

Analyst Mark Mulligan’s recent Insight Data Report found that 32 percent of consumers around the world are now using streaming services to access music. This opens up a whole new revenue stream as streaming gains popularity.

Subscriber growth

While Apple still dominates download sales, more and more users are moving towards subscription-based cloud music services such as Spotify, Sony Music Unlimited, Rdio and rara.com, all offering vast catalogs and different experiences.  

Gartner predicts subscription revenues will be the fastest growing part of digital music revenues over the next four years, increasing from $532.1m to $2,218.4m by 2015. This points to an enormous opportunity for streaming services. However, providers must strike a balance between the needs of the rights holders, consumers and device partners in order to build, license and run services which are both profitable and appealing.

Music consumption

The rise of mobile devices globally means that there are more channels for streaming music than ever.

A key to yielding profits from music streaming services lie in a captivating experience. Consumers now expect to easily access media anytime, from any device. For subscription service providers, income will be generated from a platform that is all-encompassing, allowing users to curate their own playlists whilst discovering and rediscovering music via innovative recommendation tools. Higher quality audio is also becoming a staple with a growing number of streaming services. These tools will not only enable users to navigate vast catalogs offering millions of tracks but will also enable service providers to stand out in an increasingly crowded market.

The value of the enhanced experience will ultimately convert users to paid subscriptions. 

Licensing

Music service providers are highly selective with the partners they work with. This is to ensure they gain the support of the music industry and that the end product is feature-rich and appealing to target markets. Service providers must also consider the potential of the offering in light of the needs of the rights holders and the device partners.  

By engaging directly with the rights holders and demonstrating value, providers can ensure that the industry can thrive with a series of legal and compelling services that are profitable, while meeting consumer demand. 

The procedure for securing licensing is a notoriously complex procedure, especially for new service providers. Fortunately, the creation of the Global Repertoire Database is making great strides towards a more streamlined process, making it easier to license music on a global scale.

Business model

In the last year many digital music services have expanded into multiple territories as consumer demand increases globally. While the benefits of expansion are clear due to increased user numbers, it doesn’t come without its challenges. Brands must navigate the intricacies of licensing in different regions, each with their own complex rules and requirements, before settling on a business model most likely to succeed. It is equally vital to offer both local and international content to appeal the new global audience. 

While the focus of many subscription models has been based on the “freemium” experience, it can be counterproductive financially, even as it gains users. This is largely due to fluctuating advertising revenues. Pure ad-funded, on-demand music services have not proven to be economically viable in the long-term, forcing some service providers to adopt subscription tiers in order to generate revenue. 

If the end-game for digital music services is paying subscribers gained directly or indirectly via a bundling partner, then how are providers attracting them?

Some brands entice new users with promotions and marketing campaigns which can be costly but ultimately profitable. Others attract them with extended free trials, such as (Sony Music Unlimited), or via heavily discounted gateway tariffs (rara.com), before upselling with additional features and a premium experience.

Ultimately, the marketplace will be better served with a variety of choices. The record industry is increasingly showing a desire to foster innovation and will be more inclined to license and support differentiated services which target varied consumer groups, not just early adopters. Mark Mulligan’s research shows that 55 to 64 year olds represent a credible 23 percent share of global music streaming penetration, proof that demographics are changing. This will provide more regular income for the entire value chain, so they can focus on giving the consumer what they want – unlimited access to the music they love.

About Omnifone

Omnifone is a leading B2B digital music company which develops, licenses and manages cloud-based digital music services, enabling customers to deliver music across virtually all connected devices, globally. Omnifone offers a growing catalog of 22 million tracks across 33 countries.


[1]http://www.techradar.com/news/internet/music-streaming-up-700-per-cent-in-2012-says-universal-uk-boss-1112606

 

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Jun 10, 2021

G7 Summit guide: What it is and what leaders hope to achieve

G7
G7Summit
Sustainability
EU
3 min
Business Chief delves into what the G7 is and represents and what its 2021 summit hopes to achieve

Unless you’ve had your head buried in the sand, you’ll have seen the term ‘G7’ plastered all over the Internet this week. We’re going to give you the skinny on exactly what the G7 is and what its purpose on this planet is ─ and whether it’s a good or a bad collaboration. 

 

Who are the G7?

The Group of Seven, or ‘G7’, may sound like a collective of pirate lords from a certain Disney smash-hit, but in reality, it’s a group of the world’s seven largest “advanced” economies ─ the powerhouses of the world, if you like. 

The merry band comprises:

  • Canada
  • France
  • Germany
  • Italy
  • Japan
  • The United Kingdom
  • The United States

Historically, Russia was a member of the then-called ‘G8’ but found itself excluded after their ever-so-slightly illegal takeover of Crimea back in 2014.

 

Since 1977, the European Union has also been involved in some capacity with the G7 Summit. The Union is not recognised as an official member, but gradually, as with all Europe-linked affairs, the Union has integrated itself into the conversation and is now included in all political discussions on the annual summit agenda. 

 

When was the ‘G’ formed?

Back in 1975, when the world was reeling from its very first oil shock and the subsequent financial fallout that came with it, the heads of state and government from six of the leading industrial countries had a face-to-face meeting at the Chateau de Rambouillet to discuss the global economy, its trajectory, and what they could do to address the economic turmoil that reared its ugly head throughout the 70s. 

 

Why does the G7 exist?

At this very first summit ─ the ‘G6’ summit ─, the leaders adopted a 15-point communiqué, the Declaration of Rambouillet, and agreed to continuously meet once a year moving forward to address the problems of the day, with a rotating Presidency. One year later, Canada was welcomed into the fold, and the ‘G6’ became seven and has remained so ever since ─ Russia’s inclusion and exclusion not counted. 

 

The group, as previously mentioned, was born in the looming shadow of a financial crisis, but its purpose is more significant than just economics. When leaders from the group meet, they discuss and exchange ideas on a broad range of issues, including injustice around the world, geopolitical matters, security, and sustainability. 

 

It’s worth noting that, while the G7 may be made up of mighty nations, the bloc is an informal one. So, although it is considered an important annual event, declarations made during the summit are not legally binding. That said, they are still very influential and worth taking note of because it indicates the ambitions and outlines the initiatives of these particularly prominent leading nations. 

 

Where is the 2021 G7 summit?

This year, the summit will be held in the United Kingdom deep in the southwest of England, with Prime Minister Boris Johnson hosting his contemporaries in the quaint Cornish resort of Carbis Bay near St Ives in Cornwall. 
 

What will be discussed this year? 

After almost two years of remote communication, this will be the first in-person G7 summit since the novel Coronavirus first took hold of the globe, and Britain wants “leaders to seize the opportunity to build back better from coronavirus, uniting to make the future fairer, greener, and more prosperous.”

 

The three-day summit, running from Friday to Sunday, will see the seven leaders discussing a whole host of shared challenges, ranging from the pandemic and vaccine development and distribution to the ongoing global fight against climate change through the implementation of sustainable norms and values. 

 

According to the UK government, the attendees will also be taking a look at “ensuring that people everywhere can benefit from open trade, technological change, and scientific discovery.” 

 

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