Photo credits: Graphic Design by Emily, snsnep
As UMG mega-studs like Lucian Graine and Michael Nash continue to plot the strategy behind ‘Streaming 2.0,’ a bevy of questions are swirling. What will this bold and daring future of music streaming look like — particularly as it relates to revamped superfan and ‘super-premium’ tiers?
Universal Music Group’s most recent quarterly earnings call etched out—at least preliminarily—the broader vision behind ‘Streaming 2.0’ as it relates to upcoming streaming tiers and superfan maximization. Major streaming music platforms are part of the plan, but what will this bold future entail?
As it relates to maximizing per-subscriber revenue, CEO+Chairman Lucian Grainge outlined a shift from the currently limited plans at major streaming music platforms to something more sophisticated — and profitable. Think multiple tiers for different levels of music fans—with superfans dishing out more for extra goodies—and you’ve got the general idea.
Welcome to the bright future of music streaming, which includes, among many other things, more subscription tiers stuffed with goodies.
But this isn’t just Spotify cooking up a super-premium tier anymore. Now, all the streaming platforms will be playing ball, and every major platform is in discussions with UMG and other major rights owners.
All of which raises the question: What will people pay for – and what will they pass over?
According to the intercepted chatter, 2.0’s paint on upgraded tiers is far from dry for obvious reasons. Well-crafted strategy documents are lovely, though the grizzled industry vets among us warn that trial-and-error may be required to learn what sticks.
This brings us to the latest error: UMG and other major labels had been leading the charge on raising prices only to get spooked by the subscriber ‘plateau’—but does this mean that music fans can still be coaxed into paying more than $11.99 a month if the goodies package is enticing enough?
If you’re one of the legions of laid-off execs blindsided by plateau anxiety, you might be skeptical. However, this might be the strategic pivot the industry needs. Still, maximizing per-monthly charges with smartly-crafted super-tiers is a tricky game, especially since music fans can always say no.
And let’s be honest: so far, the industry’s response to super-premium proposals has been a bit ‘meh‘.
For years, Spotify has been teasing a super-premium package. But almost immediately after Daniel Ek offered the company’s latest version, several skeptics wondered if the billionaire CEO was losing his edge. For starters, Ek seems to have overlooked that premium audio—a major part of Spotify’s splashy upcoming upgrade—is already a serious differentiator at Apple Music. Perhaps most importantly, it’s baked into Apple’s lower-cost plan and integrated hardware.
Beyond that, Ek’s lightbulb moment regarding pre-sale concert tickets sounded equally problematic after Live Nation CEO Michael Rapino offered few promises to Spotify and other streaming platforms—that is, outside of accepting the biggest bids for exclusive access.
So, Spotify can offer you a pre-sale offer if Citi doesn’t offer a higher bid for the privilege?
And what about the endless stream of goodies already enjoyed by streaming subscribers – at no extra cost?
Case in point: Spotify is already doling out pre-sale exclusives to loyal artist followers. But now you’ll need to pay for that?
And that’s just one example of the endless freebie perks streaming music fans enjoy. Indeed, streaming music platforms have been bending over backward for years to give subscribers more stuff – without tying those improvements to increased prices or premium tiers. That includes lyrical overlays, better algorithmic recommendations, curated radio shows, integrated concert listings, merchandise offerings, exclusive artist showcases, podcasts, audiobooks, and high-fidelity audio.
All of which begs the question: How much more does this industry have left to give?
According to Universal Music Group, the flowing tiers of ‘Streaming 2.0’ will lure people to pay more. Grainge & Co. say they’ve done their research, and a significant portion of current subscribers are willing to pay more—i.e., if they build it, they will upgrade.
And maybe we’re truly living in ‘Streaming 1.0’. But how easily does 1.0 go to 2.0 – and will streaming music platforms work in lock-step to get the industry there?
For inspiration, you have to look across the other pond to China. That’s where the success of Tencent Music Entertainment’s ‘Super VIP’ tier is whetting the appetite for higher-priced tiers that revolve around higher-value offerings. Now, the billion-dollar question is whether that sort of traction will take root in the US and worldwide.
More as this develops.
