I spent some time organizing my music over the long weekend, and thought I’d share a playlist I kept throughout the year of songs and artists I discovered. Most of it was released in 2016, but there are plenty of exceptions that were simply new to me. For those who know my taste in music, it’s about what you’d expect – half americana/country/folk with lots of pedal steel guitar, and the rest a mix of indie, alternative, hip hop, and electronic.
For full albums from the artists above, I’d recommend just a handful:
A Sailor’s Guide to Earth – Sturgill Simpson
Sometimes I Sit and Think, and Sometimes I Just Sit – Courtney Barnett
Paradise – The Wood Brothers
The Education of a Wandering Man – Jamestown Revival
Schmilco – Wilco
Soft Animals – EP – Sofi Tukker
Fear Fun – Father John Misty (I also recommend his newer album, ‘I Love You Honeybear’)
It’s easier to share music on Spotify, but I’ve come full circle back to Apple after the Apple Music subscription service launched. I started with Spotify when subscription streaming first began, but never liked the UI. I switched to Google Play in 2014, which was an improvement, but I still found myself using Apple for my existing music library. So when Apple Music launched in 2015, it was the obvious option for me. I prefer Apple’s interface and playlists over those from both Spotify and Google Play, and like the integration with my mostly obsolete library of music I accumulated from 1994-2015.
But Apple still has quite a bit to work out. It can be buggy across devices, and there should be a better social component to the platform. There should also be easier ways to share more than a preview of songs, especially if they are shared with someone who has an Apple Music subscription.
It’s interesting to see the music industry converge on a $120 per year subscription revenue model. You can now pay Apple, Spotify, Google, and a range of smaller providers $10 per month for basically unlimited access to all available music. There are some exceptions, such as regional access – earlier this year I was frustrated that quite a bit of Japanese music isn’t available in my Apple Music subscription – but just about everything is available.
After making the leap to a subscription model, I think most people who care about music will be locked in for a long time. There may be some switching between platforms, as I have done, but there’s a huge incentive to avoid ever paying for an album or song again because everything’s already included in the subscription. I now only buy albums when I want the vinyl or know the artist. And once you go a few years without buying albums or songs it becomes pretty difficult to walk away from the subscription model. You’ll either lose all the music you discovered over that period, incur a big cost to purchase it a la carte, or settle for an ad-supported model with no downloads on mobile devices.
I suspect most people will just keep paying the $10 per month.
It seems odd to me though – maxing out at $120 per customer each year feels like a sub-optimal outcome for the music industry. With music ownership – physical albums and digital downloads – it was easier for the music industry to extract different amounts of value from different market segments. Casual listeners may have only spent $20-30 per year on a couple albums or a handful of songs, but music enthusiasts would spend substantially more. For many years I probably averaged $300-400 per year on music purchases. With unlimited streaming subscriptions, it’s much more difficult to price discriminate across these segments. My streaming subscription is worth more than $10 per month to me, but that’s all I have to pay.
As I was thinking about this I became more curious about the streaming subscription market and found some data on music revenue trends:
US recorded music revenues peaked in 1999 at over $14B per year when CDs still dominated, went into free fall for the next decade as pirating became a thing, and then stabilized at around $7B per year in 2010 and have stayed there since. In 2010 streaming subscriptions represented just 3.5% of the market. By 2014 they were 12% ($800M), and in 2015 were 18% ($1.2B). With Apple reporting 20M paid subscriptions globally last month, that’s about $2.4B per year assuming prices are similar between countries. At least half of this is probably in the US. Add in Spotify, Google, and the long tail of smaller players, and I’ll bet last year’s US paid subscription revenue was well over $2B, passing CD revenue for the first time.
As the music ownership markets gradually disappear – taking the most valuable music customers with them – and subscription streaming becomes dominant for the foreseeable future, I suspect we’ll see new pricing models that try and extract more value from heavier subscription users. A few thoughts come to mind. Caps on the number of monthly streams could be added, not unlike mobile and home broadband data caps. Quality tiers could be introduced (i.e., making Tidal a feature, not a product). There could be higher price tiers for access to new music within the first few months after release. Taking this a bit further, artists with negotiating power who want to maximize new album revenue, such as Taylor Swift, could charge via the streaming music providers for early access to their new releases.
I’d bet overall subscription prices rise at some point as well. Prices are currently set at levels to acquire new users and grow the market. The music industry needs to convince the masses to try a new way of paying for music. Once the subscription market is relatively saturated and few people are buying music to own anymore, I would think the music industry would raise the cost per stream, forcing Apple, Spotify and the rest to raise their prices. Maybe not in 2017, but I’d guess soon after as the music industry regains some confidence after a painful and uncertain 15 or so years.