MIDiA has an interesting post this month on a topic that’s been on my mind: the price point of 9.99 (dollars, Euro, or pounds) for subscription music services.
Streaming music is still on the rise, with 106.3 million subscribers in 2016 and a larger number expected in 2017 (thanks to factors like new services on the market, an expansion in the Chinese market, etc.). However, MIDiA expects this growth to slow down and reach a maturation phase by 2019.
How did we get to the magic number of 9.99? Much of it has to do with record label agreements. Labels negotiate with music providers so they get a certain cut for each play of their artists’ music. Providers have to price their services high enough that they actually turn a profit. As it turns out, 9.99 is what a lot of subscribers are willing to pay.
In order to prevent a stasis of subscriber numbers, I’m curious to see if subscription services are going to start playing around with different offers at different price points. Can a service charge more if they’re going to offer other perks, like early access to concert ticket sales? Can they offer niche subscriptions at a lower price point? (MIDiA mentions the Overflow, which is a Christian music service. I know there could also be a market for a classical music service with super clean metadata, but that market probably isn’t big enough to turn a profit.) Now that record labels are going full-bore with exclusives (see this great piece on The Ringer for an idea of my feelings re:exclusives), can streaming services offer an a la carte “exclusives only” option at, say, 2.99 a month so users can hear new music but stick to the 9.99 platform of their choice?
No matter what, I think we’re going to see some interesting innovations in streaming music over the next couple of years. Spotify may not be making money yet, but the rise in streaming music subscribers has services feeling confident enough to take some risks.