New Music Seminar: Music Subscription Companies Talk Differentiation in a Crowded Field

From left: Moderator Stephen Bryan, EVP digital dtrategy and business development WMG; Mark Piibe; Sachin Doshi; Jim Cady; Andy Chen; Jon Irwin

A panel of representatives from the music subscription business tackled issues including market differentiation, how to expand internationally and what Apple’s entrance into the space means for competitors Monday at the New Music Seminar. Panelists included Jim Cady, president and CEO, Slacker; Andy Chen, CEO, Wimp Music; Sachin Doshi, head of development and analysis, Spotify; Jon Irwin, president, Rhapsody; and Mark Piibe, EVP global business development and digital strategy at Sony Music Entertainment.
 
Cady described Slacker’s position in a crowded market of streaming services as one that focused on curated radio for casual consumers. He said the core Slacker user may not have a specific song or artist in mind that they want to hear, but does have a general sense of what they like. Even though Slacker includes options for on-demand listening, Cady said 83 percent of its users just use the radio service.
 
For Spotify, radio usage is not as high, but Doshi said users are in a similar passive or “lean back” mode when they choose to listen to a playlist created by a friend or artist. Spotify’s radio feature is included as a part of the service’s free, ad-supported tier, which Doshi said has been effective at competing with piracy and luring users into a paid subscription model.
 
Rhapsody, for its part, is focused on editorial content and programming, according to Irwin. In an environment where most streaming solutions offer similar catalogs containing tens of millions of songs, he said users need to be guided in order to see value beyond simply having a music archive.
 
Launched in 2010 in Norway, WiMP similarly focuses on editorial content in the five countries where it operates, including Denmark, Sweden, Poland and Germany. Chen, who took on the role of CEO only recently, said the company employs a team of editors in each country to provide strong editorial content for its music on a daily basis.
 
WiMP was originally launched as a service of the mobile phone carrier Telenor, and many panelists discussed the importance of forging partnerships with carriers in order to leverage their billing and distribution capabilities. Doshi said Spotify has found partnering with carriers in some South American and Asian countries to be a particular challenge, since many customers have pay-as-you-go plans as opposed to monthly subscriptions. In response, Spotify is considering offering daily or weekly passes in these countries.
 
Piibe, the sole representative of the major label system on the panel, said he understood the importance of embracing new music services since he used to work for one as an early employee of Napster. He said the industry’s attitude has changed from the days when labels feared cannibalization to one today where they’re more open to learning and experimenting with great new services and business models.
 
“Instead of being gatekeepers, we want to be gate-openers,” he said.
 
In response to an audience question about Apple’s radio service, which was announced almost simultaneously at the company’s Worldwide Developer’s Conference in California, Cady said he is focused on providing users a great experience on any platform, as opposed to restricting them to one, as Apple has done with iTunes Radio. He also said he sees a silver lining in the arrival of a major new competitor.
 
“Apple has significant marketing budgets, so I think they’ll create awareness of radio services at a level that wasn’t possible before,” he said. “A rising tide lifts all boats.”