A rising tide lifts all pirates — how exclusive releases could destroy streaming

Beyonce. Taylor Swift. Drake. Kanye West. Rihanna. Coldplay. Radiohead. Future.

What do all these artists have in common?

If you answered screaming teens, then you’re right, but that’s a different conversation entirely.

What all these artists have in common is that they have all released platform exclusive music content in the past year.

This new phenomenon of “windowing” your product on one specific platform before a widespread release (and in some cases there might not even be a widespread roll out) has grown hugely since the release of Tidal and Apple Music.

As we all know at this stage, Spotify changed the way we consumed music. Spotify, by partnering with music companies, were able to sidestep the legal issues that faced previous streaming companies like GrooveShark and enter the mainstream. We suddenly had the ability to access almost any song with only a nominal monthly fee for the pleasure. No matter what arguments can be made for and against streaming (and I’ve argued against streaming in a previous blog) from a fan perspective streaming has only been a good thing. So good, in fact, that competitors inevitably arose. Usually, competition is only a positive thing for the consumer, but the business plans of Apple Music and Tidal may yet spell disaster for music fans, and for artists. In order to compete and grow market share, the companies introduced exclusive offerings.

This started with Tidal, as artists like Prince, who was a co-owner of the platform, made their music exclusive to the platform (it is also available on Google Play, but not on any other competing streaming platform). This made business sense as the artists who own Tidal want their fans using their platform, but it started a trend.

Apple paid huge sums of money to Taylor Swift to exclusively host her back catalogue. Both Kanye West and Beyonce famously released their last albums (The Life of Pablo and Lemonade, respectively) exclusively on Tidal, to varying degrees of success. And Drake released his most recent album, Views, exclusively on Apple Music.

In fact, Views was so successful for Drake that it destroyed a streaming record set by Justin Bieber’s most recent album Purpose. Purpose set the record on Spotify, a platform with over five times the number of subscribers as Apple Music, and Views managed to break this record on Apple Music by selling one million copies within its first week of release — on a single platform. Beyonce’s Lemonade worked off a dual service model, with streaming exclusive to Tidal and digital sales made available shortly after on iTunes, and this was equally successful. Lemonade solde 576,000 copies in the first week, of which 485,000 were full album downloads.

Kanye’s The Life of Pablo was a single-service roll out, streaming exclusively on Tidal for 6 weeks before becoming available on all streaming services. Within the first 10 days of being made available on Tidal, the album was streamed 250 million times. Six weeks later, the roll out to all platforms gave the album a second life and pushed it to the top of the Billboard charts in America. That type of second life is something that very few artists can pull off.

With these success stories, it appears that window releases are the way forward. And it works out favourably for almost all parties involved. The artist gets a large fee for the exclusive hosting of their release, the platform gets an opportunity to drive up their users and solidify their market share through an extended period in the spotlight, and there’s an opportunity for the artist to get a second life when the product is rolled out to the rest of the platforms, driving their revenue even further. Spotify have said they are not interested in paying artists for exclusive releases, but that position may change as they continuously secede market share to their competitors.

But here’s where it gets tricky. While, in the short term this approach is successful, long term the industry may be shooting itself in the foot, by forcing users to give their information across multiple platforms. For consumers, streaming exclusives can create a very expensive digital environment. Fans who signed up to Tidal to hear Life of Pablo or Lemonade suddenly had to subscribe to Apple Music to hear Views. By design, the services don’t make it easy to cancel subscriptions after the free trial ends, so users end up paying for multiple platforms. What labels need to realise before it’s too late is that the Spotify model works because it’s convenient. Most people are happy to pay a nominal monthly fee if it means they can easily access new releases with minimal effort — as a result digital piracy and illegal downloading becomes less appealing.

By putting increasingly numerous hurdles in front of users with exclusive windowed releases, users could be led back to piracy. It’s inconvenient, but it’s more convenient than signing up for multiple services. As it is, the price of an annual membership to Spotify is higher than what the average person spends on music otherwise, so by forcing the user to pay that same amount again companies are running the risk of alienating their fanbase that they have fought so hard to win back.

That’s important to remember as well; while windowing is completely normal in other forms of entertainment (look at the multiple different streaming sites for film and tv, for example), the music industry is trying to pull their fanbase out of the Napster/Kazaa/Limewire piracy mentality. The film industry is trying to prevent the majority of their consumers from going down that path, but music fans have already been there. We are only paying for streaming now because it is more convenient than piracy. Once that convenience isn’t an option, the majority of users will go back to piracy.

Within hours of release, both The Life of Pablo and Lemonade had leapt to the top of the charts for Kick-Ass Torrents and The Pirate Bay. The Pirate Bay estimated that The Life of Pablo was illegally downloaded 500,000 in the first 24 hours. Albums regularly turn up in their entirety on YouTube within hours of release, exclusive or not, and rack up huge plays. These sort of trends show that the music industry hasn’t yet recovered from the piracy that crippled it in the wake of Napster.

Even Prince, whose music is only available on specific sites, and who was a co-owner of Tidal, had reservations about exclusive releases, saying that “Artists want as many fans as possible to hear whatever they’re excited about or interested in — exclusive get in the way of that from both sides.”

Ultimately, if exclusives continue to result in more albums sales or more users for streaming services, then the companies will continue to pursue them. For streaming platforms the business case is easy to understand — in the face of the titans that are Spotify and Apple Music, exclusives are probably Tidal’s best chance of wooing people over. But unless artists step back and look at the larger picture then we run a risk of further damaging our already fragile industry. Windowing and exclusive releases make sense, they drive up your income with exclusivity fees and create a buzz about the release. Multi-platform releases make sense, they give you access to the largest possible audience, and don’t alienate a cohort of your fanbase. It’s up to artists and labels to manage exclusive deals and weigh up the pros and cons to ensure their music is being made available to as many people as possible, without driving people back to illegal downloading.

If we are not considerate of the long term effects this business model has on the consumers, we may just find ourselves right back where we started, surrounded by pirates on a sinking ship.

http://www.theverge.com/2016/5/11/11657820/exclusive-albums-are-the-new-normal

http://www.rollingstone.com/music/news/exclusive-album-windows-the-future-of-streaming-sony-chief-says-20160219

http://www.techradar.com/news/audio/music-streaming-exclusives-are-turning-lemonade-back-into-lemons-1319710

http://www.billboard.com/articles/news/7385219/beyonce-drake-exclusives-explosion-streaming-album-releases

http://www.rollingstone.com/music/news/on-the-charts-beyonces-lemonade-stirs-up-number-one-20160501