Topic: Digital music distributors’ increasing market-share
This insightful article by The Economist discusses the vast industry of music distribution. The editorial highlights the current state of the industry, its leaders, and what each firm brings to the table. Lastly, the author gives his view of what the future of the industry may look like.
The music distribution industry has experienced a major shift in the past few years, thanks to radical innovation, inextricably bound to the general shift to more digital mediums in the past 10 or so years. While in the early 2000’s, the norm was buying physical albums, and around 2008 it was buying digital music on iTunes, both these mediums are nowhere near the most popular way to acquire music. Nowadays, digital distribution services, which operate on a premium membership business model are the market leaders. The concept of an online music service has been around since the late 90’s, with software like LimeWire being popular at that time. As mentioned above, there are countless businesses currently in the distribution industry, however, there are two main businesses carrying the torch, and they couldn’t be any more different from one another.
Apple is the newest business to throw their hat into the ring with their ‘Apple Music’ streaming service. Their service charges customers a flat $9.99 per month to stream any music for free from apples servers. Apple’s main advantage over other businesses in the media distribution is the fact that they are a large business. By virtue of this, Apple can use its brand strength to sign popular artists to time-bound, exclusive deals. This is how Apple hooks the hardcore fans of popular artists. But, when it comes to the casual fans, Apple has already won them over. The inherent user friendliness and no-frills design philosophy of Apple makes it so casual music listeners will automatically gravitate towards Apple Music.
On the other hand, Spotify is a small independent business from Sweden that has been around for over ten years, but has only just become a household name in the past two. Spotify charges the same amount as Apple Music, making them direct competition. While Apple has their eye towards the future by signing new artists, Spotify has the advantage of being around longer, and therefore have a larger back catalogue of music that Apple may not be able to acquire rights to.
In my opinion, Spotify has a better value proposition than Apple. They’re more likely to have classic tracks you might love, and their service is compatible with far more devices than Apple, as they’re not bound to a single hardware company. From personal experience, I bought a Spotify premium membership over a year ago, and have never been disappointed since.
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