Very interesting hypothesis.
Ravi Shroff

My guess is that the optimal model lies somewhere in between Pandora and Spotify.

Maybe not $10 per month — maybe $5 or $6 and it is primarily a radio service — with some limited track on demand capabilities.

Again, you have to look at all the players in the equation and look at what their motivations are -and what they ought to be.

Record execs have different motivations from artists which have different motivations from consumers.

The right model aligns all of those interests

So a consumer might say: I want to hear what I want when I want to with great sound on any device and listen to as much of any song or artist as I desire.

Essentially Spotify, but with Pandora’s play listing capabilities and the high quality audio of Tidal or Deezer (which I find slightly better than Spotify’s high quality audio)

The artist wants to get paid for her art — so if you are paying for the ability to listen to her — she wants her cut. What is the right cut? as much as she can extract. However, a slightly more enlightened artist might realize that only say 5% of all listening on a service might be for her songs — and that service (say it was Pandora) paid $600M to sound Exchange. she might feel entitled to $30M — however, Sound Exchange takes its cut, as does the record label she is on etc…. — so even the most absolutely successful artist in the world (yeah thats you Taylor Swift or Adele) might look at it in a more enlightened way and say — rather than extracting as much as I can — I can make far more touring — so lets use that service as a promotional vehicle for my upcoming tours — let’s use the data to plan my route — let’s sell tickets on it — let’s sell merchandise — let’s get people signed up for my fan club — and let’s do all sorts of exclusives on it so that I can better engage my fans. That’s a lot of if’s and maybe’s — but it could work.

And the record label wants to sell music pure and simple. Which they can’t because people don’t buy. So they actually are the ones who want to push royalty rates as high as possible. They tell the artists that it is for their own good — that they are protecting their interests — and they are — to a degree.

So to me the music service of the future is a partnership with artists. Artists contribute music for a % of revenue generated for sure — which essentially goes to the record labels that own a piece of them. And the service offers up music to the public — with every opportunity for the artist to promote the best way for them to thrive, which is by doing live shows.