On the 20th of August this year, Frank Ocean released his much anticipated sophomore album, Blonde, exclusively through Apple Music. Although the album got critical acclaim in the music press, others criticized Frank Ocean and Apple. This had less to do with the music itself, but more with the way of releasing the album, upsetting players in the music industry such as other streaming platforms and major music labels, as well as fans not using the designated Apple platform.
Universal Music Group, world’s biggest music label, reportedly banned all of its subsidiaries and artists from engaging in such exclusive deals. Criticism was that reducing an artist’s reach like that has negative effects on the artist for gaining popularity. Head of creator services of Spotify, Troy Carter, who has been Lady GaGa’s manager in the past, has deemed “exclusives are bad for artists, bad for consumers and bad for the whole industry” as limiting access to music increases incentives of music listeners to download it illegally by pirating or YouTube where it generates less revenues. Spotify, however, has been the industry’s favorite punching bag for years due to it’s low royalty payments for artists and the company could be disappointed because of it’s biggest rival in the streaming realm to land such an exclusive release, excluding them from the benefits of release hype. Furthermore, Spotify itself has exclusive content in the form of live versions of albums and songs on their own platform.
It all boils down on differentiation, as multiple platforms in the industry offer similar services, often for the same price of €10-a-month-subscription fee, they might want to set themselves apart. Could Apple be blamed for being detrimental for the music industry or it is just the next logical step to take in this competitive market? Luckily for all, the album has eventually reached all relevant streaming platforms, including Spotify.
Nice article Bas! You point out an important and interesting problem in the music industry. I agree with Universal that these ‘exclusive deals’ will have a negative effect on their popularity. But I think that the ‘real’ fans (which generate most of the profits) will subscribe for these platforms anyway. Nevertheless I think this trend is getting problematic if it continues like this. For consumers it is of course better if they can find all their favorite artists in one place. I don’t think that we have to worry about the artists, it is their decision to release an album on an exclusive platform and they will probably get a lot of money for it.
You ask whether we have to blame Apple to take this step, this is very difficult to say at the moment. From my perspective (consumer) it is a bad idea, because I have to subscribe for another platform just for one (or a few) artists. From Apple’s perspective it is an interesting option to consider. They are a major player in the industry (think about iTunes) and they have probably enough resources to make such a platform a success. I think that Apple has to focus on artists which have a ‘hardcore fanbase’, since these fans are more likely to subscribe. This can lead to network effects where a higher number of subscriptions attract more artists. And a larger number of competitors might lead to cheaper subscriptions. Nice to hear that the album is now available on all relevant streaming platforms, this could indicate that it’s too early for Apple to release exclusive albums.
Hi Bas, interesting article! What is your opinion of the type of market that the music streaming industry is? To me it seems like it could be a winner-takes-all, as users don’t want to pay for multiple monthly subscriptions just to be able to listen to the music they want to. But I read that Apple Music was consistently growing in user base (http://www.theverge.com/2016/9/7/12836994/apple-music-17-million-subscribers-2016), up to 17 million+ within a year. Do you believe that Apple Music and Spotify are able to exist next to each other, or will one come out as victor?
I think that the fact that Spotify is against exclusives is mainly due to their business model. As Apple Music and Tidal, both very known for exclusives, only have a paid revenue model. This means that they can provide higher per-stream payments to artists for exclusives, making it much less attractive for artists to put an exclusive on Spotify.
What is also interesting is that Spotify has started to punish artists who have those exclusive deals with Apple or Tidal by keeping those artists off playlists and decreasing visibility in search results. Even songs that are premiered on Apple’s Beats One radio station are retaliated against. Luckily it is mainly the big artists who feel those retaliations now, but it could become more of a problem when making songs or albums exclusive becomes the norm and the smaller artists will be affected.