subscriptions vs sheets

Spotify spotify spotify! So much buzz. Buzz buzz buzzzzz.

It’s just not that big a business.

It is a real business, yes. Subscription on-demand services are really useful for people who care about music and have disposable income, especially if the subscription can be used on a portable device. But for people who don’t care about music, they can put on free radio or a semi-random MP3 they got from a friend. For these people it’s same songs over and over again and so what.

There aren’t that many music fans with disposable income out there, so the business isn’t that big. Maybe there are 25 million people in the world who would pay $10 a month for the subscription. That’s a $250 million business globally.

That makes music subscriptions a quarter of the size of the sheet music industry. No matter how you work the numbers they stay in that range. Call it 100 million people and $20 a month, which is way beyond the point of realism, and it’s still only $2 billion. This isn’t nothing. It’s a good business. But it’s not going to take the recording industry back to the glory days, which is what all the hand-wringing is about.

One thought on “subscriptions vs sheets

  1. As an early advocate of subs, I still have a weak spot in my heart for the biz model. I think there’s still a substantial potential customer base for them, especially if they include (a) unlimited DRM-free downloads (which UMG has already gotten behind), and (b) streaming to mobile devices, with caching, a la Spotify. Obviously, the market size won’t be anywhere near $40B global (record retail at its peak), especially in the early years of deployment, so they need to be integrated with other revenue models, from ad-based to licensing, and supported by 360 artist management.

    All that being said, your math is off.

    25mm subs x $10/month is actually $3b per year, not $250mm. Which is a pretty nice chunk o’ change. And 100mm people at $20/month (which I believe is an unfeasible price) would actually deliver $24B in annual revenues.

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