Speaking at the Great Escape conference in Brighton, England, Universal Music Group International VP of digital Francis Keeling underlined his belief in the subscription model, lauded hot startup Spotify, backed the freemium business model and decried how the glacial pace of acquiring licenses is “stalling our industry.”
From Music Ally’s post on the discussion:
What new models is UMGI keen to support? “Subscription services are the future for us, and it’s very important that people around the world are supportive of subscriptions,” said Keeling, who went on to say that while people buy music a la carte from digital stores, “they don’t buy on a regular basis”. Which is why UMGI likes subscriptions.
Keeling also pointed out that some of the label’s partners – mobile operators and ISPs – already operate subscription-based businesses, so applying this model is a good fit. Or would be, if the licensing issues are solved.
“Spotify has been a big success,” said Keeling. “It works off this freemium model, which was always a big jump for us – to let consumers access music for free, and get them off pirate services, with the aim of getting them up the ladder…”
An obvious counterargument is that rate at which freemum services like Spotify convert free users into paying users. Spotify’s conversion rate is in the low single digits. But Keeling says the rate is “absolutely heading in the right direction” and helping move people from illegal to legal services.
Keeling’s enthusiasm is notable for one important reason: in Spotify, music companies actually have a product that can shoulder big expectations. Spotify isn’t yet a game changer, but it deserves enthusiasm and has raised the bar for other services.
In the end, the quality of the product matters more than a music company’s enthusiasm for that product. UMGI can’t force consumers to warm to its favored business model. It needs a product that can expand the market for that business model. UMGI needs a service to do for subscriptions what iTunes did for a la carte downloads. Without the right product, a business model will go nowhere.