What that Jay Z track is all aboutFirst, it’s worth putting that Jay Z exclusive into perspective: Beats Electronics, which got recently acquired by Apple, started to air a new World Cup-themed ad dubbed The Game before the Game earlier this month. The ad, which features raps by Jay Z, quickly became a hit online, and has already amassed more than 10 million views on YouTube. This week, Beats Music started to stream a remix of the track used in the ad. Beats got access to that remix a week before it appears on competing music services, which led Billboard to muse that exclusives could become key to Beats Music’s strategy going forward. The Verge assumed that it would be “impossible for any other service of its size” to get these kinds of exclusives. Except it’s not impossible. Exclusive access to tracks or even entire albums a few days before the competition gets its hands on them is something that music services have been doing for a long time to differentiate themselves in a world where every service offers access to the same 30 or so million songs, for the same price, on the same devices. Rdio recently got an exclusive Snoop Dogg track. Spotify at one point had an exclusive remix of Daft Punk’s Get Lucky. Jay Z distributed his latest album Magna Carta Holy Grail exclusively through Samsung for 72 hours before it hit the stores last summer. Deezer, Google Play and everyone else is also experimenting with exclusives all the time, but thus far, none of those one-off deals have moved the needle for any of these services.
Netflix didn’t start with exclusive content, but with a large back catalogThere’s still something that music services can learn from Netflix — and Amazon may have been the first to take notice. Netflix owes a lot of its success to binge viewing, allowing its users to burn through entire seasons of TV shows at their own pace. Binge viewing has defined how Netflix releases its own exclusives, with all episodes of new seasons becoming available at once. But before Orange is the New Black and House of Cards, there were Lost, the West Wing and Battlestar Galactica — older shows that allowed people to discover things they missed on TV, re-watch their favorites and expand their pop culture horizon. What fueled Netflix’s initial growth wasn’t the latest shows that were on TV last night, but convenient access to the classics without breaking the pocket book. That’s exactly what Amazon is now offering its Prime subscribers. Amazon’s newly launched Prime Music service also doesn’t have the latest and greatest. It only has about one million titles, compared to the 30 million that Spotify is offering its customers. Of course, one million is just about as much as Pandora has, and its more than 70 million monthly active users don’t seem to mind.
There are a lot more casual listeners than hardcore music fansI believe Amazon’s Prime subscribers will be equally forgiving. That’s because Prime Music doesn’t target the hardcore music fan with a Spotify subscription and a big iTunes library, but the millions and millions of casual listeners — people who tune into Pandora but would love to listen to entire albums every now and then as well. People in their thirties and older who haven’t significantly changed their taste in music since college. People who haven’t been buying a whole lot of music in recent years. There are a lot of those folks out there — a lot more of them, arguably, than heavy music buyers — and those casual listeners couldn’t care less whether a single new track is exclusively on one service or another. What they are interested in is rediscovering the classics, and listening to them on their own terms. In other words: binging. Of course, that’s what every subscription music service offers, but unlike others, Amazon isn’t charging $10 a month for it, or subjecting users to ads, while still offering full on-demand access. Which is why its focus on inexpensive access to archives may be a lot more successful than spending a lot of money on a handful of exclusives here and there.
“Shutting down a company after 4.5 years is going to be painful for anybody but is particularly painful for us here at Earbits. (…) We proved to ourselves and a substantial number of artists and listeners that our concept does work, that our vision is what the industry and larger streaming providers need to be doing in order to create more value, but that we simply needed a lot more capital to pursue such an aggressive mission properly.”
Earbits offered users a personalized radio service similar to Pandora, with one important difference: The service didn’t have any ads, and also didn’t charge users for subscription fees. Instead, it tried to connect listeners with artists and labels, effectively turning music streaming into a marketing machine. This actually worked remarkably well, according to Flores:
“By showcasing features that allowed our listeners to connect with our artists, we generated for them hundreds of thousands of new mailing list signups and Facebook fans across a relatively small audience. The revenue and other value that our partners generated from these new connections was often ten or twenty times higher than what they receive from ad-supported royalties on major services, and it provides concrete evidence that there is more streaming companies can do to provide the content community with a return for their hard work.”
There have been a lot of discussions about the money artists and labels are getting from streaming services like Beats Music and Spotify. Some of these services have started to embrace marketing and merchandise sales as additional benefits for artists; Beats for example has bought the artist commerce platform Topspin and wants to integrate it into its own service.
“To be clear, what we are doing right now is collecting information, not regulating. We are looking under the hood. Consumers want transparency. They want answers. And so do I.
In all of the articles on this topic — which is complicated, but has real implications for consumers because it turns internet capacity into something that more closely resembles cable TV.I’ve called for the FCC to get data so we can understand if there is a problem. Are ISPs abusing their power as the sole provider of last mile connectivity and trying to charge companies like Netflix fees to get onto their networks?
Given that in much of the world interconnection agreements are informal and free (and even in the U.S. many interconnection agreements between big name content providers and ISPs are formal, but unpaid) this is an issue worth scrutiny. And if the FCC finds that the lack of a competitive last-mile broadband market is enabling a few ISPs to behave badly it should act.
But hopefully the threat of greater transparency will be enough to solve this problem.