"Even as they have grown, streaming companies have encountered a stubborn problem: Music lovers will consume large amounts of music as long as it is free, but getting them to pay a monthly subscription has proved much more difficult."
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People are more than happy to sign-up for music streaming services, but when it comes to pay for access, very few feel it is something they want to do.
Pandora has for example 70 million users, but only 3 have decided to pay for the Premium version of the service.
While most industry players are attempting to have music fans pay for higher quality audio options and a no-ads experience, it is likely that the future of music monetization will not be anymore in direct music sales.
"Several analysts doubt that streaming companies can attract enough paying customers with only recorded music, citing a sharp drop in music sales over the past decade and abundant free music online. And they say it will be difficult for them to survive on advertising alone."
The key to survival for music producers, whether large or small, may be indeed elsewhere.
"...some see these companies’ success as lying in a so-called subsidy model, in which music sales support another business with higher margins.
Apple, most notably, used low-margin music sales to spur demand for iPods, phones and computers.
“Music is an accompaniment, to add to your jog, your workday, your prep in the kitchen,” said James L. McQuivey, an analyst for Forrester Research. “But it’s not something you’re eager to pay for if you don’t have to.”
The likely outcome is, as it is already happening, that monetization will come from everything that ranges from events, to merchandising and to collector's items.
(Image credit: Woman listening to streaming by ShutterStock)