Saturday, February 18, 2017

Is It Time to Press ‘Reset’ on the Streaming Business Model?



say last week wasn’t particularly good for Guvera might be an understatement. The Australian streaming service announced it would seek an $80 million (AUD) IPO, and the response from other Aussie tech bigwigs was swift. That response, unfortunately, came in the form of comments generally associated with horror films or mass catastrophes — one venture capitalist dubbed it “horrifying,” while another claimed it left him “terrified.” The only response Guvera’s CEO could muster was to basically call them haters, which works if you’re a rapper or Taylor Swift but isn’t so great if you’re the head of a major company.

In all fairness to Guvera, they’re not the only streaming service that’s struggling right now. Deezer called off an IPO last year, and Spotify has yet to pull the trigger despite multiple rumors of an offering. Spotify also came under fire during a panel at music business conference MIDEM, where a prominent VC pointed out the despite being the biggest player in the space, they still lost a couple hundred million dollars last year. She went on to explain that this was why VCs tend to avoid the music space.

And while more users have been adopting streaming technology, the numbers don’t suggest the massive uptick that these services might need to survive. There’s a decent possibility we could be left with streaming services that are all part of much larger companies that essentially subsidize them as loss-leaders for other products or services. Add to this a growing backlash from many artists who feel they’re not being paid enough, and it looks like dark days for streaming up ahead.

So what if we ripped up the streaming model and just started over from scratch? I’m not saying we will, or even that we should — but it’s worth pondering. What would the music world look like if we all just hit a giant reset button and began again?

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