The list of subscription service holdouts got shorter when the Eagles’ catalog — all remastered — was finally added to services like Spotify, Rhapsody and Google Play Music All Access. The legendary group had been in the company of the Beatles, Led Zeppelin and Garth Brooks as the most notable acts whose music wasn’t yet available at the services many people consider to be the future of music listening.
“It was time,” Eagles manager Irving Azoff says. “We don’t make enough money on downloads to matter. It’s good for our fans and makes them more responsive at the live shows.”
The subscription services got the band’s six Asylum studio albums and three Asylum greatest-hits collections but not the 1994 Interscope live set “Hell Freezes Over” or the 2007 self-released (through Walmart) studio album “Long Road Out of Eden.”
The nine releases added to subscription services have sold 149,000 albums plus 73,000 tracks year to date (June 23), according to Nielsen SoundScan. Billboard estimates the band would have made about $250,000 from those sales.
The Eagles’ decision to join subscription services could help convince other artists to follow suit. The conversations with holdouts are “challenging, but these Eagles catalog titles help move that conversation further,” Rhapsody VP of label relations Jason Schneck says.
The fear has been that subscription services would rapidly lead to the cannibalization of music sales, which are still the primary source of recording revenue for many artists.
Once a speck on labels’ income statements, subscription services have become a more significant and growing revenue stream. Spotify accounted for 1.7% of record industry revenue in 2012, up from 0.4% in an abbreviated 2011, according to Billboard estimates. (The service launched in the United States in July 2011.) Given the $4.1 billion of U.S. trade revenue from retail in 2012, Spotify’s 1.7% share was worth $68.5 million to labels.
Other digital services were in the same ballpark. On-demand video services YouTube and Vevo had shares of 1.6% and 1.5%, respectively. Rhapsody also had a 1.6% share. Muve Music ended the year with 0.8%. Through its MP3 store, Google also had a 0.8% share, a figure that will increase in 2013 in part from the subscription service the company launched in June. On-demand services in the top 20 accounts grew to a 9% share in 2012 from 5% in 2011.
Payouts have long been a frequent criticism of subscription services through the years. Even so, services have been able to convince artists of the importance of their platforms. Nettwerk Music Group music manager Ryan Chisholm acknowledges that streaming revenue isn’t on par with download revenue, but says “fighting the evolution” of music is counterproductive. “We do need to fairly compensate our artists, writers, producers, engineers, musicians and rights owners in this transition, but until we reach mass scale, the money paid out won’t excite opponents of subscription platforms.”
While some artists worry subscription services will cannibalize sales and hold back new releases, there have been examples of artists (Daft Punk, Mumford & Sons) setting streaming records while generating strong first-week sales. “Word-of-mouth is such a large component of sales that it doesn’t make sense to turn off your access to a core music audience that may generate millions of impressions and recommendations to others,” Creed Co. GM Rob Bonstein says.
The value of subscription services goes beyond royalties. As Azoff suggests, they have promotional value. Giving fans the opportunity to legally access an artist’s music on their service of choice is arguably better than preventing that access. The services can also be valuable for older acts hoping to reach younger users.
Such services are sure to mention these benefits in their pitches to artists. One executive tells Billboard that the company’s pitch centers on the artist’s legacy.
(Additional reporting by Ray Waddell.)