Holiday Discounts on Streaming: Who's Offering and What It Costs (Them, Too)
This year has been a beast. Mercifully, 2016 will officially begin its denouement next Wednesday, after the polls are closed and the world, whether it likes it or not, is left to live with the choice Americans made on election day. After that, everything will be smooth sailing; no doubt nothing of any note will happen between Nov. 9 and Dec. 31... except discounts. Lord, the discounts; Black Friday, Cyber Monday, Single's Day -- there's no drought of opportunity for the spendthrifty over the coming months. (PSA: If a store is playing classical music, get out of there.)
This was the year that music streaming services helped turn around, after a fashion, the fortunes of the recording industry. So it's a safe prediction that one popular stocking stuffer this year will likely be a subscription to one of those services, of which there are many.
So, in the spirit of the season, which will be offering up access to the history of music -- but for cheaper? As with everything involving the music business, there's a catch. But first, the deals:
-- Apple began offering a discount on Apple Music two months ago, debuting a 12-month subscription to the service for $99. (Unclear whether this is the rumored discount that so many, we suspect spuriously, reported on this week.)
-- A source tells Billboard that Spotify will be offering a discount on a three-month subscription beginning Thanksgiving week and lasting through the end of the year.
-- A source says SoundCloud is still working out its plans for the holidays.
-- Tidal will be selling gift cards through Walmart, GameStop and Best Buy.
-- Pandora will not be offering any holiday deals.
-- Amazon did not immediately respond when asked about its holiday plans -- but considering that we're talking about one of the largest retailers in the world, you can likely expect something.
-- Deezer did not respond when asked about its holiday plans.
-- Google tells Billboard that it has no plans for across-the-board discounts, but that its free trial is awesome.
Now, about the catch.
You may or may not be aware that of all the (all-you-can-hear) music streaming services, none has generated or maintained a profit for any notable period of time. The forecast remains sunny for streaming, but the market leader in terms of subscription numbers, Spotify, lost $204.1 million last year. That figure is likely less shocking over at Apple, which doesn't offer a free tier (and which doesn't break out Apple Music financials in its earnings releases). It's probably not great for SoundCloud right now, either. Pandora is a different story, as it takes in the bulk of revenues from advertising, though it did post a net loss of $61.5 million this past quarter.
What do these losses have to do with holiday discounts? A bit.
Rights holders -- record labels, publishers, performance rights organizations, and the rest -- all have a vested interest in helping to grow a robust, competitive streaming market. That doesn't mean, however, that they are willing to budge (much) on how much they charge services to use the music and compositions they own the rights to. These are billion-dollar companies and they're not here to make friends. Some lower price points, like the one Amazon offers to stream music only from your Echo, don't lose Amazon money because they are baked into the deal Bezos and Co. struck with the labels.
What this means is that (almost) every customer a streaming service gets at a discount costs them a not-insignificant amount of money; music licensing is where most of that money goes. (The same goes for telco deals, like the one announced between Napster and Sprint yesterday.) On the path to "critical mass," the point where services like Spotify have so many subscribers (or at least listeners) that they can't help but make money, one must take care not to step on a rake.