Sony Questions Value of Free, Ad-Supported Music Streaming Services

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spotify-logo.gifFor those of you who may not follow Taylor Swift's career that closely (gasp!), the artist recently pulled her entire catalog from Spotify. Now, the New York Times and other media outlets are reporting that Swift's label, Sony Music, is beginning to question the value of making its artists' music available through the free, ad-supported streaming platforms. Many music-streaming services offer two tiers: a free, ad-supported tier and a paid subscription tier. Sony seems satisfied with the subscription model but questions whether the free tier is really paying off, so to speak.

From The New York Times
Taylor Swift's feud with Spotify continues to reverberate throughout the music industry, with a top Sony executive questioning the value of free music as streaming services grow around the world.

At an investor conference in Tokyo on Tuesday, Kevin Kelleher, the chief financial officer of Sony Music Entertainment, was asked about Ms. Swift's recent decision to remove her catalog from Spotify. The streaming service has both paid and free tiers, and Ms. Swift apparently withdrew her music because Spotify would not make it available only to paying subscribers, who contribute the bulk of Spotify's revenue.

"A lot of conversation has taken place over the past week" in light of Ms. Swift's decision, Mr. Kelleher said. "What it all really comes down to is, how much value is the music company and the artist getting from the different consumption methods?"

"We are very encouraged with the paid streaming model," Mr. Kelleher continued. "The key question is whether or not the free ad-supported services are taking away from how quickly and to what extent we can grow those paid services."

According to Sony, streaming and subscriptions will represent 60 percent of the music industry's digital revenue in four years, up from just 18 percent now. Spotify, the most popular subscription service, has 50 million users around the world, 12.5 million of whom pay for monthly plans, the company reported this month.

Additional Resources
Led Zeppelin Albums Released on Spotify at
Sony Re-Evaluates Support for Free Music Streaming from The Wall Street Journal.

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