Are Subscription Music Services the Future?

It’s been almost 2 years since I wrote about the subscription music service called Rdio when it first arrived in Canada (Whatever music you want, whenever: $5 a month).

I’m a lot more bullish on it now than I was then. It’s clear to me that subscription services are the very best way to discover and enjoy music.

That said, I’m wondering whether Rdio and other services like it represent the future.

Our wont as consumers to “own” music might just be too strong.

Rdio is like Netflix, but for music. You pay $10 a month and download or stream all the music you want.

Most albums on iTunes are $10 alone.

Since it was introduced in Canada, Rdio has blossomed into a mature service.

My biggest complaint when they launched was a lack of selection. Rdio has resolved that matter.

Rdio now offers millions of songs spread across all genres.

I haven’t had any problem lately finding the music I want to listen to. This includes even the newest releases of popular music.

Rdio isn’t the only subscription service out there, though. Others include Spotify, MOG, and Rhapsody. But they aren’t available in Canada.

Microsoft provides a service like Rdio in Canada. It carries the inelegant title of “Zune Music Marketplace“.

I’ll just refer to it as Zune.

It’s a great service, but Zune is unfortunately limited to Microsoft’s software environments, like the XBox 360, Windows, and Windows Phone.

In theory you can use Zune in a web browser. But that’s really only true in Internet Explorer on Windows. Don’t even try to use Zune in a Mac web browser.

Rdio, on the other hand, can be used pretty much anywhere. There are native apps for every mobile platform, as well as desktop apps for Mac and Windows. Plus, Rdio has just introduced a gorgeous new web site that performs perfectly on any desktop computer.

Apple offers a service in Canada that borders on subscription, called iTunes Match. But it’s more about indentifying the music you’ve already got and making it available to you through the company’s iCloud service.

You pay Apple $28 a year to scan your iTunes library. Then all the songs you didn’t actually buy through iTunes – like the tracks you ripped from CDs or bummed from your friends – become available for download to all of your devices.

Like Microsoft and Zune, though, iTunes Match is strictly Apple-only. While you can get iTunes for Windows, don’t expect this to work on your Android device.

A service identical to iTunes Match is built into Rdio, though.

Rdio can also scan your iTunes library and add the tracks you already own to your collection in the cloud.

(Neither service actually uploads any song files. Instead they just match the songs you already have with what’s available in their catalogue.)

The hit rate is pretty good, too. Out of my 9,800-track iTunes library, which admittedly contains some pretty esoteric stuff, Rdio matched over 7,700 tracks in less than a minute.

One of the biggest debates around subscription services, though, is whether artists actually get paid enough, or even at all, for their music.

Some artists, like the Black Keys and Snow Patrol, claim they don’t. So they’ve blocked their latest albums from being available through Rdio and Zune. (All of their old stuff is available, though.)

Music companies claim subscription services generate more money for artists than album sales, though.

One executive says that, on average, iTunes music consumers spend $40 a year on music. Compare that to the $10 each month a subscription service user spends.

And there are reports that in its first 2 months of service, Apple’s iTunes Match generated over $10,000 in new royalty payments for artists.

On the other hand, some reports suggest that each time a song gets listened to through a subscription service, the artist gets paid less than a quarter of a cent.

The bottom line: we’ll probably never know if online subscriptions services duly compensate artists for their work. The music creation, production, distribution, and delivery foodchain is simply too complex and opaque to ever derive any truth from.

But at the end of the day, should we care?

If artists don’t get paid for their music being played through subscription services, they can follow the example of the Black Keys and Snow Patrol and simply withdraw from the environment.

But that might be a shortsighted move.

In Sweden, home of Spotify, subscription music revenues already exceed iTunes revenues. I’m betting this is a trend that will continue in other regions.

Taking this into consideration, instead of withdrawing, artists may want to embrace the subscription model.

Then as we consumers gradually overcome our strange fetish for “owning” music as CDs and MP3 files, artists will be better positioned to reap subscription’s larger revenues.

I still think subscription services are the future of music. And I recommend you sign up for Rdio now. But I don’t expect you will.

Our collective inclination to feel like we must “own” the tunes we love is going to restrain the growth of subscription music services like Rdio for some time.

Originally published in the Yukon News on Friday, March 16, 2012.

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