Jason Herskowitz is a core contributor and co-founder of Deezer and Beats. For music lovers, this increased competition means the continued and deepening user-base fragmentation across multiple music providers. In a vacuum this fragmentation is no big deal, but given the lack of music data portability across different services, this will break the promise of the social web for music fans who can’t easily share what they love.
I fear this fragmentation will inevitably lead services into exclusivity wars, where big checks start flying around to get content that their competitors can’t. It’s certainly not a stretch to expect to see the recently announced upcoming Nine Inch Nails album available only on the service in which its creator, Trent Reznor, is Chief Creative Officer. At SXSW, an executive from Xbox Music confirmed that labels have already started shopping exclusives to the providers. The more competitive the market, the bigger these bidding wars become — which is dangerous and unsustainable on their own, given the economics of the subscription music market today.
The lure of bigger checks (which can be creatively accounted for) incentivizes the rights-holders down a road that ultimately leads us back to the failed model of the first generation of subscription streaming providers: MusicNet vs. PressPlay, where each only had a subset of the content that consumers were looking for.
From there, there are really only two viable paths for a consumer to take to fill the voids: the creation of a music data interoperability layer that allows them to seamlessly piece together multiple disparate sources — or a return to piracy. I don’t think anyone wants the latter, so I am back up on my soapbox about the need to create the former.