Pandora/Rdio

You’re just a pawn in their game. You think by protesting freemium you’re saving the world from broke musicians. But Wall Street talks and you walk, and it all comes down to money. And those with the deep pockets are playing for high stakes and they don’t care about what’s happening in your bedroom, the only thing that matters is the boardroom.

The music industry is stupid. But how would you expect otherwise, it’s run by uneducated street hustlers who believe they can win through intimidation and subterfuge. But as skilled as the Mafia might be it’s ultimately no match for not only the government, but the true business titans.

Rdio was doomed to fail because its market share was too small. This is what you don’t understand as you wave your liberal flag and agitate for manufacturing to come back onshore and bleed your heart over the local establishment that’s threatened by the national big box. The people love low prices and they go where everybody else does, and if you haven’t got critical mass you might as well close up shop, because the times they are ‘a changin’. We only want the biggest and the best, the rest are history. Not only in music services, but musicians. We’ve got all the time in the world for the titans, both new and classic, but if you’re not world class, you’re HISTORY!

Like Rdio. Some say its interface was the best. But that’d be like arguing for Beta instead of VHS. Critical mass is more important than quality, as long as quality doesn’t really matter. That’s right, the average punter couldn’t tell the difference between Beta and VHS, even though the former was technically better, all they knew was the latter was cheaper and was what everybody else was using!

YouTube and Spotify freemium are cheaper. And no one’s using Rdio, not to mention Rhapsody and Apple Music… HA!

You play the long game, something the music industry gave up on in the seventies. It’s about establishing careers and then milking them FOREVER! But in a short term economy it’s all about today’s hits and tomorrow’s irrelevant, the CEO’s moved on and his bonus is in the rearview mirror. How can it be that Daniel Ek knows more about business than the record company titans? He knows it’s all about the LONG TERM! And in the process not only has he kicked the ass of Rdio, he’s stymied Jimmy Iovine, who thought music rules transferred to tech, BUT THEY DON’T! How much money has Uber raised? The rest of the unicorns? In tech you spend until you’ve got enough users and market share to turn on the spigot, to make money. Even Evan Spiegel of Snapchat knows this, but not Lucian Grainge.

Spotify’s the best thing to ever happen to twenty first century music industry. Because it killed piracy and spent up the yin-yang on freemium. Most people will pay…BUT NOT YET!

Like I said, it’s a long game.

Something that not only those who ran Pandora but their investors didn’t realize. A famous name goes public and it takes eons for investors to wake up to bad margins and no future. The sucky radio service only operates in a few territories and has got no future, what to do?

BUY BUY BUY!

As for Ticketfly… Welcome to the great consolidation. In an era where Spotify is valued at a greater number than Live Nation you don’t think someone’s gonna roll up the assets, you don’t see the advantage of owning Universal if you’ve got a deep pocket, leveraging all that music?

The power does lie with the musicians, if only they had some self-respect and realized they possess the juice, the electricity that powers the whole enterprise. Create hits, build an audience, and not only will you get rich you will dictate. Isn’t that what Taylor Swift did? Isn’t that what everybody’s debating about Adele’s “25” release? Forget the rabble-rousing of the has and never-beens. If you’re generating cash you’ve got the business titans over a barrel.

So Pandora’s got to make a move. They’ve got to go to on demand. But their launch is gonna be too late and they’re not willing to lose money on freemium, never mind getting the right to do so, and therefore I’m not betting on Westergren’s company, but at least we’ve got a horse race. And it’s a duel to the finish. When we get to the finish line there’ll be a big winner and a couple of also-rans. Quick, who came in second at the Kentucky Derby? You’ve got no idea, and he who comes in second in the streaming race will be a marginal player. The winner will have 70+% market share. And in tech it’s not about profitability but market share. Get enough eyeballs and you can leverage your way to profitability.

Tim Westergren’s already history, he’s no different from the music execs, a short termer who’s gotten rich and is now nearly forgotten. A tireless promoter he got his audience to agitate for low streaming rates so the company could continue and the end result is the artists have been screwed. That’s right, radio pays differently from on demand. But if even the musicians can’t figure this out, don’t expect the great unwashed to. But now that Spotify and Apple have radio as well as playlists, what is Pandora to do?

What did Amazon tell us to do? Get ahead of the market and keep spending until there’s no one left in the landscape. Now no one can compete, Jet.com is a failure, Amazon owns the retail world, and has leveraged its assets to become a huge player in cloud computing/storage. Daniel Ek and Spotify have repeated this formula in plain sight and the only ones who seem to believe are the investors/Wall Street, you don’t hear them complaining, it’s only the musicians, labels and writers, saying the company is unprofitable. But the truth is one service is gonna win and make money and then may end up as a feature, a small part of a larger conglomerate. Hell, Amazon gives music away free as part of its Prime plan. Amazon is the sleeping giant here, not Apple. Not that Bezos always wins, but at least he understands the game. Music is a feature, a way to get people in the door. Because it’s the second most exciting thing next to sex. Have some self-respect, you’ve got the key in your hand, turn o he engine.

Sure, we’re switching to electric vehicles. But you still get there just the same, the music doesn’t change, just the delivery system. But just like Volkswagen owns more car brands than you can count, consolidation is the way of the world. There are only three major labels, two big promoters and if you think Spotify, Apple and Pandora can all win you’re clueless.

Once again, the music business is more interesting than the music itself. Because everybody making it wants to be a tech titan, or have the riches thereof. Years from now no one will remember Rdio. Will they remember your band?

That’s your challenge.

Look inward, not outward.

You speak with your tunes, not your social media footprint. Hunker down in your home studio and change the world. Your manager and agent will run interference. Where your music is exhibited, where you play live…that’s irrelevant, that can change, the only important thing is bonding an audience to you.

Rdio didn’t do that. Therefore it’s history. Like so many of the bands of yore, even the ones who had hits!

~~~

–
Subscribe to the LefsetzLetter
–
Visit the archive
–
Twitter
–