streaming

Sporting Value

The new Premier League season is well under way, and it’s at this time of year that the big sports TV players tend to gather up their marketing spends and splash the cash around, trying to persuade those of us who don’t subscribe that we really should be.

BT Sport has an entertaining video of a small girl taking on heroes, promoting BT Sport’s coverage of the Premier League, Champions’ League, Europa, Moto GP and Rugby Union amongst others. Everyone wants to see Gareth Bale “act” after all.

Meanwhile Sky’s ad features an army of literal “armchair fans” as they settle down for the new season of football. It includes their presenting talent in the ad, including Jeff Stelling who was seemingly contractually obliged to appear in every advert on television during the World Cup.

But there’s a new player on the block. No, I’m not talking about Premier Sports who scooped up the rights to the pre-season ‘tournament’ that literally nobody cares about, the International Champions Cup (Seriously, do you even know who won?).

No, I’m talking about Eleven Sports which has just launched in the UK.

Incidentally, I did look to see if they’d made a TV ad. But if they have, I couldn’t find it, and their YouTube page has a grand total of 13 videos, the newest of which is over a month old, and all of which seem to be about the World Cup.

Eleven Sports is a London based company that was started by the Italian businessman Andrea Radrizzani. Hitherto they’ve mostly been active in other territories like Belgium and Poland. But under the management of former BT exec Marc Watson, they’ve been running around snapping up sports rights from under the noses of Sky and BT.

Sky has lost La Liga rights after many years, while BT has lost Serie A games which it has had pretty much since it launched its sports channel. They also grabbed the rights, at least this year, to the PGA Championship which had been floating around for the last year or so after Sky lost them.

These losses come at a time when Sky is about to lose its ATP tennis to Amazon, who have just begun showing this year’s US Open. And the FT reports that BT is going to be losing its NBA and UFC contracts shortly.

The only really good news for the incumbents, BT and Sky, is that as they enter the final year of their current Premier League agreement, their next three year contract starting with the 2019/20 season will be flat in terms of costs. 

But consumers probably need to ask whether they’re getting good value. BT has just put up its fees for BT Sport, while Sky’s went up in April.

Over at Eleven Sports, they’ve done a deal with Facebook to stream some of their output there (Incidentally, when I searched on Facebook for ‘Eleven Sports’ it was the second link I had to click. The first was a Burmese newspaper).

Eleven Sports’ pricing model is either £5.99 a month or £49.99 for the year, and you can get a 7-day trial. But it does all feel a bit rushed. While there is an app, the Android one doesn’t yet have Chromecast (although it’s said to be coming). That’s led to some scathing early reviews. So good luck watching golf balls on a 5″ screen. Watching on mobile is an essential bonus, but that 46″ block of glass in the corner of the living room is much better in overall terms for watching sport on.

In other territories, Eleven Sports has sub-licenced games to other sports providers. Maybe that will happen here, but I can’t see that it’s in either Sky or BT’s interests to give a leg up to a new competitor. So we’ll have to wait and see. Another FT piece says  that neither has bitten yet.

I confess that I’m slightly dubious about how many people will subscribe for La Liga or Serie A. Yes, those leagues have Messi and, now, Ronaldo, but for me they were a nice-to-have bonus. Ex-pat Spaniards and Italians will perhaps seek them out (or use vicarious VPN systems to log into local language feeds). And of course both leagues do have their hardcore fanbases. But is it all sustainable in the longer term?

There must be questions about whether they have overpaid for rights. They claim not to have, and it’s true that Premier League rights increases have left both Sky and BT with less money for other sports. BT is said to be likely to lose both NBA and UFC coverage fairly soon.

On Radio 4’s Media Show last week, Marc Watson talked about how much football Eleven Sports had put out – more than any of the other sports channels. But what is the quality like, and is there an audience for all of it? 

More worryingly a streaming-only option can be a challenging option is significant parts of the UK. I might be able to happily stream 4K* but I know I’m in the relative minority. Streaming is much easier to do when it’s not live. Netflix and the iPlayer team are able to encode very carefully to ensure that the right amount of bandwidth is used on an almost scene-by-scene basis. Fast action requires more data; a slow conversation requires much less. When you move to a live environment, particularly when there is lots of action (so sport by definition), you have the twin problems of needing high bandwidth to capture the action, and the need to encode on the fly in a sub-optimal manner because you’re broadcasting live. Netflix has a whole programme to work with local ISPs around the globe to minimise network traffic, and ensure the best experience for the end user with as little lag as possible. The BBC Research and Development also published a really detailed summary of their 4K trials with Wimbledon and the World Cup over the summer that gets into some of the challenges with live versus pre-recorded. While HD might be easier to do live, the same issues exist.

From an overall consumer’s perspective then, to watch the same sport this season as last season, both BT and Sky have increased their prices well ahead of inflation. Meanwhile they have less sport each, and to get back to the status quo of last season, the consumer needs to spend another £5.99 a month on top of those increases for some sport that they can no longer [easily] watch on their television.

In any event, I’m surprised by how little I’ve heard from Eleven Sports on a consumer basis. While soft-launches are sensible when you’re launching a new streaming platform, the football season is underway now, and they’ve not really started a major consumer marketing proposition that I’ve noticed. Compare and contrast with Amazon’s current marketing blitz for their US Open coverage.

Time will tell.


* I don’t actually, for the good reason that I don’t have a 4K TV.

Is IP TV Really Ready for Primetime?

Last night YouTube TV went down for an hour. That’s not YouTube the platform, but the premium TV service that YouTube offers customers in the US a range of broadcast TV channels in exchange for a monthly fee. The service went down right in the middle of the England v Croatia World Cup semi-final in Russia.

Every time a set of major sports rights comes up for sale, there is more and more discussion about whether a major internet platform like Amazon, Facebook, Google or Apple will be bidding. So far, there have been a few toes dipped in the water. Amazon has a small package of Premier League games from the season after next; Amazon also has ATP tennis in the UK from next year, and has had a few tennis tournaments this year; Amazon has streaming Thursday Night NFL rights, sharing them with free-to-air and pay-TV ; Facebook has bought Premier League and La Liga rights for a handful of Southeast Asian countries.

But at the same time, there are ongoing problems with many of these streaming technologies. In Australia, Optus had massive issues with its World Cup rights as I’ve mentioned previously. They’ve ended up refunding subscribers, and allowing all their games to be shown on free-to-air broadcast TV. ITV Hub has had various issues during earlier games in this World Cup (although I’ve seen few reports for the semi-final last night). Hulu’s stream of this year’s Super Bowl went down towards the end of the game. There are plenty of other examples.

Streaming is hard, and the resources to ensure no breaks are not to be understated. You might get angry if you can’t stream an episode of GLOW on Netflix because something between Netflix and your ISP isn’t working right. The worst that might happen is that you have to wait a bit and watch it later. But that’s not a remotely satisfactory solution for live sport.

If a company the size of Google can still have a major outage during a global event like the World Cup, then you know that this isn’t easy. During the Sweden v England quarter-final, the BBC reported a record 3.8m live streams at one point. And of course, there were also reports that the stream fell over towards the end of the game for some.

It’s notable that for the World Cup, the BBC’s UHD streaming experiment was initially limited, to ensure that those who got a stream weren’t going to be disappointed half way through when too many other viewers caused the whole system to fall over (Of course, viewers would quickly find out that they were well behind other versions of the picture meaning that you could be hearing your neighbours cheering a goal minutes before you saw it yourself).

The same fixture had broadcast viewing figures of over 19m, with many more watching in pubs and at outdoor events. And while we need to be careful about comparing audiences (1 stream does not equal one viewer; they are not measuring exactly the same thing), it’s clear that the vast majority still watch via the more robust broadcast systems. The question is, for how long?

Talk to a TV engineer and you’ll begin to understand why broadcast is still better. The Freeview transmitter network is very robust with built-in redundancy to ensure that TV channels’ signals reach local transmitters. While local transmitters can fail, these tend to be extraordinary events, and their “up time” is high. If the transmitter is working then the only reason you don’t get a picture at home is down to your set-up (e.g. a faulty antenna on your roof). Satellite transmission is also remarkably robust – with perhaps only extreme weather causing picture degradation.

With IP, there are many places that the system can fail. Broadcasters are reliant on large Content Distribution Networks (CDNs) to distribute programming. And that complexity increases with live. Then there might be a local problem with your “exchange”, or even the local fibre cabinet near to your street. Perhaps your the free router your ISP gave you has failed. It can be hard to diagnose, and there are many potential points of failure.

For the most part, service will probably resume quickly. But just how quickly is another question.

I’m not arguing that IP can’t fix some of these problems, or be more robust. But I do think that it’s going to be a significant technical challenge, with many parties involved, and broadcast is better in many respects. From a broadcaster to transmitter might only involve a couple of specialist companies. The pictures arrive faster, and there are fewer places for things to break. One viewer or 30 million viewers? It makes no difference.

On the other hand, some future live event will take the record for streaming again, but these will be more worrying moments as systems are put under bigger pressure than ever before.

I’m not ready to give up broadcast as efficient video and audio propagation methodology just yet.

2018 Media Predictions

It’s that time of year when, because not a lot else is going on, and pages need to be filled, everyone is busily predicting what might happen in 2018.

So here are my bold and not so bold predictions in the coming year across the media industry.

  • A streamer will win some Premier League rights. Having written at length about this process, and not really come to a strong conclusion that it makes sense for any of the big players to get involved in the Premier League rights auction, I can still foresee 1-2 packages going to them just because the Premier League probably thinks it has rinsed as much as it really can out of BT and Sky.
  • Digital advertising will continue to grow, but continue to have major questions asked of it. How much of digital advertising is fraud? How much of it actually works? Does anyone at all actually click on an advert unless it’s a mistake? Google Chrome is introducing it’s “ad-blocker” in February, and advertising that doesn’t adhere to the Coalition for Better Ads guidelines will get blocked. That will clean up part of the problem, in that the worst offenders will be disincentivised some of the worst practices. But that’s not really enough. Lots of agencies are getting asked lots of questions, and yet the money keeps flowing their way. Incidentally, an ever greater part of the digital advertising world is becoming owned by IT services companies like Accenture. Could Publicis or WPP actually get bought by one of these?
  • Radio listening among younger audiences will decline. I don’t think I’m letting the cat out of the bag with this one. While overall reach has held, and probably will continue to hold up, time spent listening to those services will decline amongst younger audiences. They’re spending too much time on YouTube, Spotify and Amazon. See every RAJAR summary I’ve published in the last couple of years for more.
  • Smart speakers will be everywhere. With the basic models going for £35 this Christmas, and near enough every portable BlueTooth speaker likely to include either Google Assistant or Alexa in the coming months, these speakers will be everywhere regardless of whether you think you need one or not. I’m not certain that everyone will be controlling their lighting and heating with them, as that involves spending considerably more money on technology, but it does make audio listening easier, and for things like news, sport and weather, they’re terrific. Some naysayers think the impact is overblown, but while they won’t reach everywhere, they definitely will be of use to a decent proportion of the population. And you can definitely expect an uptick in internet listening overall. I’m less certain that devices like the Amazon Show or worse, the Amazon Spot (alarm clock with an internet connected camera that you’re supposed to put on your bedside table) will quite hit the mark however.
  • No real changes in UK radio’s structure. DCMS recently published a fairly groundbreaking document that sets out to remove most regulation surrounding UK local radio. Stations will broadly speaking be able to do what they want. So expect Capital and Heart to go fully networked for example, while programmers will be able to play whatever music (or speech) they deem their audience wants to hear. Except that none of this will happen in 2018. Primary legislation is required to do it, and for the most part, Brexit is tying up nearly every part of Government. If anything, the pressure is only going to ramp up in 2018 to get that work done. “Unimportant” things like radio deregulation will have to sit and wait.
  • We will reach “Peak TV.” Many might think that we’re already at “Peak TV” with every network under the sun commissioning “original content” as a way to stand out against IP delivered interlopers like YouTube, Netflix, Amazon and Hulu. But now Apple and Facebook are entering the game, and the volumes will be ridiculous. I do think that some of these players will be challenged. Facebook isn’t going to be able to do edgy fare, so it will find it as hard to cut through as a US network might. In other words, it will take many attempts to get a hit. I don’t see Apple really having the ability to do that either. It’s worth remembering that you don’t just make good TV by throwing money at the problem. And making these shows work globally is near impossible. Different parts of the world have very different expectations. Nonetheless, TV reviewers are going to have their work cut out. In the meantime, as Disney swallows Fox (including Sky TV and Star TV), they will be transitioning their business from broadcast to IP at a faster rate. Others will follow.
  • Local news will reach a crisis point. More major stories will be missed in UK regions because, aside from the BBC, and a handful of modestly sized regional news operations, there will be no journalists to cover them.

From my own perspective, I’m vowing to do at least some of the following:

  • Watch back everything that’s still saved up on my Sky+ unwatched (including a couple of things recorded off the BBC HD channel!)
  • Get through a few more DVD boxsets that I have kicking around.
  • Books. Always books to be read.
  • Listen to more radio – in particular music radio. I spend too much time listening to speech, and while I listen to both my own music and streaming music, it doesn’t introduce me to nearly as much new music as the radio can, by placing it in context.

Dwindling Choices

A couple of weeks ago, Ofcom released its annual Communications Market Report. It’s always stuffed full of information about the UK media marketplace that can be fascinating to dissect.

In 2016, ownership of DVD players (including Blu Ray and games consoles with DVD functionality) was 67% of UK households. This year, it’s just 63% of households. That’s still most homes, but it’s indicative of the way that physical media is in decline as consumers move to streaming services.

Then yesterday, Amazon announced that it was closing Lovefilm. You may recall that Lovefilm was originally the UK’s version of Netflix in that it was a DVD rental by post business (Yes – that was Netflix’s original model too). Their basic service saw users renting films for a flat monthly fee and then posting them back when you’d watched them. In time, Lovefilm added a movie streaming service, so that by the time Amazon swooped in to buy them, it was the streaming service that Amazon was really interested in. That morphed into Amazon Prime Video, but the Lovefilm postal service remained.

And it still worked well, because unlike streaming services, customers had the ability to watch just about any film or TV series released on disc. That included classic films, genre titles and world film titles that never make it onto major streaming services.

And there’s the rub.

We have ownership of machines to play discs falling, and yet digital is not a direct replacement.

It’s all very well have a Netflix or Amazon Prime Video account, but those do not represent a full range of choice. In a Guardian piece bemoaning the death of Lovefilm, the author likened the film selection on the streaming services to the DVD selection in a petrol station. A handful of decent titles – all of which you’ve seen – and a load of trash you’d never want to watch.

That’s a little harsh, but it’s not far from the truth. Yes, the catalogues are slowly improving, but the reality is that on any given day, it’s hard for anyone to actually know what films are available on what services.

Distributors package up groups of films – some are good, some less so – and licence them to the online streamers for certain periods. That period might be measured in months, or it might be measured in years. By and large, the same film is unlikely to be streaming on both Amazon Prime Video and Netflix at the same time. So which do you buy? Both?

The reality is that the all-you-can-eat streaming services offer a fairly meagre range considering the vast breadth and wealth of cinema history. There are a few choice morsels alongside a lot of filler.

Furthermore, you can’t be certain on any given day, that a service you subscribe to will have the film you want to watch available to you.

Ah, but that’s OK. I can get everything else I want to watch from iTunes, Amazon Video (the rent-per-film part) or Google Play Video!

Well, up to a point Lord Copper.

If the film was pretty popular and released in the last twenty years or so, then yes, for around £4.49 for a rental, you probably can stream a copy, with luck in HD. But I think you’ll find there’s an awful lot missing.

Older films, classic films, mid-list films, genre films, TV series and many more.

Question for Film Distributors

If you’re a bit of a film fan like me, then from time to time you suddenly have the urge to watch a film. Assuming you don’t have your own Blu Ray or DVD copy to hand you head to the streaming services and search for it. Only to find it’s not there.

Why in 2017, is not a distributor’s entire catalogue online?

It seems to me that if you own the rights to a film, then you’re deliberately leaving money on the table if you do not at least make it available to purchase digitally in places like the iTunes and Google Play Video stores.

I’m not talking about things you’re holding back to repackage in various ways for maximum revenue – Disney, I’m looking at you!

I’m talking about average films, that if I wait long enough will pop-up once every couple of months on FilmFour or BBC2 anyway. I’m talking about solid mid-range titles, that once upon a time, I could happily find in physical format in a largish branch of HMV or the Virgin Megastore.

Here are a handful of films that I have genuinely wanted to stream but not been able to find on streaming services when I looked, all from within the last thirty years, and all currently or previously released on physical media.

  • Truly, Madly, Deeply
  • The Grifters
  • Rambling Rose
  • Enchanted April

If I started searching for older films then the list would get much longer much more quickly.

What I really don’t understand is that the costs of making catalogue movies available on these services is surely basically nil. You don’t even have to worry whether HMV will give up shelf space to a title, or Amazon warehouse space. You just list the film and let the money run in (or at least trickle in).

In 2017, if you’re a bit of a movie buff, then while the streaming services might sate your appetite a little, you’re not getting the full picture.

What you can’t do is draw an analogy with music. Spotify has a catalogue of ~30m tracks, so perhaps you could ditch your physical music collection and rely solely on their service (I wouldn’t personally, but many do). The same simply isn’t true for films, and we don’t seem to be close to that point.

Indeed if you don’t own a DVD or Blu Ray player, you’re limiting yourself enormously. And that’s before getting into the lack of extras that most streaming or download services offer.

As a consequence of all this, my physical film collection continues to grow.

Netflix and Disney

Last week came news that Disney would be pulling its movies from Netflix at the end of the current arrangement, and that Disney would in future launch its own streaming service. This licensing agreement generated a vast amount of coverage, much of it ill-informed, and ignoring wider issues in the market.

There are a few key issues to discuss here.

Disney Films on Netflix

Netflix originally signed a deal with Disney back in 2012, whereby Netflix took over from a previous Pay TV deal Disney had with Starz. Library films became available immediately on the streaming service, while Netflix gained the Pay TV window rights for new Disney movies (including Marvel, Pixar and Lucasfilm) released theatrically from 1 January 2016. In reality, that means first-run films would appear from late 2016 when the Pay TV window opened.

A Note on Windowing

It’s probably worth detailing how movie studios traditionally “window” their wares.

The Theatrical Window is usually first, and theatre owners demand that films don’t get released for usually three to four months (it varies by territory, with countries like France enforcing much stricter rules). Then is the so-called Video Window with digital pay-to-own (e.g. iTunes or Google Play Video) and physical DVD and Blu-ray releases. The former is often released a week prior to the latter. Then, a few months later, comes the Pay TV window, when films end up on premium cable and satellite channels like Sky Movies in the UK, or Starz in the US. After that initial Pay TV window, films may then go into a Second Window with perhaps a free-to-air broadcaster, or streaming service like Netflix or Amazon Prime.

Obviously with both Netflix and Amazon active in making and acquiring films, they can choose to either go straight to streaming, or miss out some of the other windows. And there is talk of a Premium Video On Demand (PVOD) window between 30 and 45 days after theatrical release that would be priced high for early streaming access. Theatre owners worry about such things because if you know you only have to wait thirty days, then you might not bother going to the cinema to see a new film.

The key thing throughout all of this is that films tend to get less valuable as the windows progress.

At the time of the Disney deal, media estimates were that the deal was probably around $300m a year for Disney, and was seen as a good deal for all concerned. Netflix paid big, but got big films as a result. Disney dramatically increased what Starz (or HBO or Showtime) would have paid, but as a studio they couldn’t miss with their Marvel films alongside the relaunched Star Wars series, as well as their high-performing Disney and Pixar output.

Now the deal is coming to an end, and films released from 1 January 2019 will not appear automatically on Netflix. Furthermore Disney is launching its own streaming service. More on this latter point below.

Cue lots of words about how this could be the beginning of the end of Netflix. The thinking is that if Disney can do this, then surely others can too. And that breaks Netflix’s model.

Well only up to a point.

It’s worth reiterating that this was a US only deal. The deal does not, and did not apply elsewhere. That’s not to say that Disney material hasn’t and doesn’t appear in other territories. It does. Star Wars: The Force Awakens was released just ahead of 1 January 2016, so didn’t make it to Netflix US. It did appear on Netflix in Canada however. Meanwhile Netflix UK has a number of Marvel films on its service, although these are second window films. They have already had runs on Sky as part of Sky’s deal with Disney (In the UK, Sky has exclusive Pay TV deals with most of the major US studios, usually locking out competitors for twelve months).

In Netflix’s recent earnings release, they reported that they had 94.36m paid memberships of which 49.38m were in the US. That leaves 44.99m outside the US, and that’s important. Within the next two or three quarters it seems likely that international will outstrip the US in terms of paid subscriptions. While that isn’t reflected in profits (international rollout is expensive), it’s important to remember that Netflix US is not the same as other versions of Netflix. Due to the way that the entertainment industry has historically worked, rights are sold on a territory by territory basis. Furthermore, different studios may own the rights to different films in different territories.

What this all means is that while Netflix losing Disney seems like a big deal, on further examination its notable that the deal didn’t extend to other territories. And those territories are growing just fine without Netflix serving up first-run Disney films.

Disney Already Streams

The other big part of this was that Disney announced that it’d launch a new Over The Top (OTT) streaming service once the Netflix deal ends.

A fact that has escaped many – including a large number of British news reports – is that Disney already has a streaming service. It’s in the UK, it’s called DisneyLife, launching at the end of 2015. Originally priced at £9.99 a month, making it more expensive than Netflix, in time it dropped its price to a more palatable £4.99. For that you get unlimited streaming access to Disney and Pixar movies, as well as all Disney’s TV programming. That amounts to about 400 movies available. The TV programming is both live and on-demand box sets. The service also offers Disney music and audiobooks, and it offers a 10% Disney Store discount.

That all said, new Disney films still get onto Sky Movies before they reach DisneyLife (in other words, the service doesn’t offer first run films during the Pay TV window), and Disney still sells its top films to free-to-air broadcasters like the BBC. I assume that maximising audience also means maximising merchandise revenues from those later rebroadcasts.

Whether Disney renews its Sky agreement in the future, or goes it alone in an attempt to bump up overall revenues will be worth looking out for. But it would seem that the UK has been used as a beta test market for the newly announced Disney service.

(Note that DisneyLife is a different service to Disney Movies Anywhere, which is Disney’s own brand download-to-own digital service.)

It’s notable that the UK DisneyLife does not include Marvel or Lucasfilm output. That’s likely to be either because Disney already had lucrative deals in place with Sky or others at the time of launch, or that including that output it doesn’t make quite as “clean” a service. The audience for Frozen is different to the audience for Ironman.

Perhaps, in time, Disney will want to include these properties in its streaming service, but I’m not sure. The core Disney (and Pixar) offering is very defined and a parent subscribing knows what they’re getting from a service. Offering a film like Deadpool (15 rated in the UK; R rated in the US) would not work. Yes — I know Deadpool is a Fox film and not formally part of the “Marvel Cinematic Universe,” but the possibility of R rated Marvel material is still there. Season 1 of Jessica Jones was rated 15 for its DVD release for example.

Finally, Disney just bought BAMtech, the streaming specialist company that was originally set-up in-house for Major League Baseball to stream their fixtures. It was spun off by them to offer streaming support to many companies around the world, and now Disney has bought it ahead of a larger rollout of a streaming service. Doing streaming well is hard as many companies have learnt to their costs, so this pay prove to be a very wise investment.

Disney Going It Alone is not Replicable

The reason that Disney is able to even contemplate a full-service streaming offering is because it has uniquely strong branding. Even the very youngest Disney film viewer quickly learns the name of the studio it comes from. They want to visit Disney Stores or visit Disney Theme Parks. I’m not at all sure that other studios have such significant branding across a wide range of output.

For example, do you know which studio is responsible for the Despicable Me franchise and its related Minions? How about Kungfu Panda? Or Shrek? Or Lego Batman?

All of those have been incredibly successful properties, but they don’t have the same consumer recognition at a studio level. I’m not saying that they couldn’t try to do the same, but that it would be hard. Most consumers, unless they work in the industry, have little to no knowledge of which studio produced which film. In today’s world, where budgets have soared, there are now multiple opening production logos at the start of feature films usually indicating many companies have stumped up the budget. What films would even be in Dreamworks or Universal branded OTT offering?

The regular concern you hear about Netflix is that its reliance on third party programming leaves it vulnerable. What if other studios pulled their output to get onto

I’m not saying that Warners, for example, couldn’t launch an OTT service off the back of their DC Universe films, but that might be a bit of a stretch. A handful of Batman, Superman and Wonder Woman films does not make a full service, even if you throw in some animated and direct-to-DVD material.

A case in point might be Sony’s Crackle service which, although advertising funded, has not really broken through in the years it has been operating. Perhaps its biggest original hit, Comedians in Cars Getting Coffee with Jerry Seinfeld is moving to Netflix.

How Many Streaming Services Are Sustainable Anyway?

In the US, the market seems to have reached the point where cable cords are being “cut” in sufficient numbers to be of major concern to the industry. Where once a consumer might spend $100 a month on a few hundred channels, only a few of which they actually watched, they’re now increasingly choosing a mixture of “skinny bundles” (Perhaps $20-30 a month for a handful of key channels, possibly internet streamed), and OTT services (Perhaps HBO Now to get Game of Thrones and Veep, or CBS All Access for The Good Wife spin-off, The Good Fight, and the upcoming Star Trek: Discovery – which notably will be a Netflix exclusive outside the US). Currently, that’s a cheaper option than the $100 bill. But how many services cumulatively would a household buy?

In the UK, the market is slightly different, but beyond Netflix and Amazon, I could also subscribe to Now TV (for subscription free Sky TV), or something like Mubi for arthouse films.

Amongst many others, the BBC and ITV recently launched BritBox focusing on UK shows that are otherwise not sold to US broadcasters. There it competes with Acorn TV’s similar streaming offering.

Meanwhile sports organisations and channels from MLB to the NFL, and the NBA to NBC Sports Gold offer paid OTT options.

How many of these individual packages is one household likely to pay for? 2? 3? 5? More?

NBC has recently announced the closure of its comedy-focused Seeso network, when many might have thought that it was NBCU’s foot in the door into the paid streaming marketplace.

It’s worth remembering that the cable bundle offer meant you get quite a lot for your money, even if you don’t watch much of it. For example, perhaps you don’t watch the food TV channels

A la carte OTT offerings mean that if you’re not interested in food networks, then you don’t subscribe to them. The corollary of that is that if you do want to watch food TV networks, you’ll probably have to pay more to see them.

The economics of 100m US cable subscribing households all contributing perhaps $0.50 a month to make the channels viable with a monthly revenue of $50m. If only 5m viewers choose to watch, they would need to pay $10 month to achieve the same revenue for those channels.

It seems likely that a lot of more niche channels will become unviable without a significant number of subscribers prepared to pay a significant fee to see them.

Netflix in the Future

Netflix has made so secret of wanting to own more of its own programming. Whether it can become completely dependent on acquired programming is questionable, and perhaps isn’t really in its business plan. But beyond the not-insignificant production costs which are eating money, once it has built up a significant library, it becomes a more attractive proposition. That is, assuming that future generations will still be at least partially interested in today’s television. While Dumbo and Snow White are ageless, it’s not clear that the same is true of House of Cards.

Netflix’s international ambitions are not insignificant either. To achieve success in these markets invariably means locally produced programming. Making locally produced shows in France, Germany, India, Brazil and the UK is not cheap. But to break properly into these markets, that’s what Netflix has to do, and that does mean a huge cash burn.

It would be a fool who tries to predict the future of a company like Netflix, and I’m not a fool!

However, I don’t see the end of Netflix’s Disney deal as nearly as groundbreaking as some would position it. Netflix probably does need to broaden its portfolio in terms of earning income. Notably they made their first acquisition last week buying the comic company Millarworld which gives them access to a number of comic book characters as well as opening a new revenue stream. It seems that owning a comic-book franchise is critical for any serious studio. Could this be the start of a wider investment portfolio which supports the main subscription offering, but provides some diversity of income?

Euro 2016 – Staying on TV

As Euro 2016 kicks off in France tonight, my inbox has become flooded with nonsense PR stories. My email address has recently been sold to a number of PR agencies and I get a wide variety of emails asking me if I’m interested in writing about things I’m not interested in writing about.

I silently archive them all, but one company keeps popping up with some ludicrous claims about the end of TV as we know it.

This was the lead line (I won’t mention the company specifically):

“Euro 2016 will likely be the final major international football tournament aired exclusively on television”

Well a few things to say about that:

  • This tournament won’t exclusively be on TV anyway. Both the BBC and ITV in the UK will be streaming their live matches on their websites and in their apps alongside their regular broadcasts.
  • The BBC and ITV already have the rights for FIFA World Cups 2018 and 2022, and Euro 2020.
  • Both the Euros and the World Cup are Listed Events – and have to be shown on free-to-air broadcast TV in their entirety.

So it would take a review of Listed Events (they’ve tried before, and quietly parked the idea), and the broadcasters who already have the television rights choosing not to broadcast them for some reason despite both of them having plenty of capacity.

I’ve no doubt that more people will watch on more devices than ever before, but those internet-connected devices aren’t going to usurp the broadcast audience any time soon.

The press release goes on to highlight lots of irrelevances:

  • La Liga broadcast a game live. They don’t highlight the fact that it was a women’s fixture. Until recently, women’s football wasn’t broadcast at all in the UK. So it’s great that there’s increased exposure for a game that is generally poorly covered.
  • Twitter is streaming Thursday night NFL games. Those would be the games that are being broadcast on the NBC and CBS television networks. The NFL knows how to disaggregate its rights to its best advantage like few other sports organisations. Sure they want some Silicon Valley cash!
  • BT Sport simulcast its European cup competition finals on YouTube. As I’ve noted elsewhere, that was to keep UEFA happy and try to reach a decent sized audience when relatively few knew about their free-to-air channels.

Marketing Week recently carried a great piece noting the inequality of counting BARB measured TV audiences versus 3 second views on Facebook or other streaming platforms. They’re not the same and they shouldn’t be compared.

Last October, for example, Yahoo claimed its livestream of an American Football game attracted 15 million viewers. That’s an impressive debut given the average TV game garners 18 million. But this is not an apples to apples comparison, it is an apples to orange skins stuffed with bullshit comparison.

While 15 million different people did indeed, at some point, briefly encounter the coverage, the average audience per minute for the livestream was only 1.6 million viewers – less than a 10th of the typical TV audience.

Every time you see a digital video “audience” it is crucial to query the metric being used to define it. For example, we know thanks to BT that the Champions League final at the weekend was “watched” in this country by a total of 4.3 million people on TV and a further 1.8 million on digital platforms. Yet BT used BARB data for TV – so someone had to tune in for a least 30 seconds in a minute to be counted as viewer – while the digital figure is a “unique view” and “not done on time like BARB”.

So let’s not be stupid about all of this.

Is streaming growing? Certainly.

Is broadcast still dominant? Absolutely.

Will streaming one day beat broadcast. Quite probably – but that day is still a long way off.

Finally, just consider the last time you had internet problems? Perhaps you had no coverage somewhere rural (or urban!), or data went down on the network, or you were in a busy area, or you had to wait two weeks dealing with BT Openreach to get your broadband up and running, or… The list goes on.

Yet your local TV broadcast mast is probably really pretty good. The worst I ever get, is some satellite break-up in particularly heavy rain. The technology is incredibly robust.

Streaming will dominate eventually. But not yet.

The End of Digital Downloads?

That’ll teach me for writing this too quickly. I based this on a Digital Music News report which was published Wednesday evening UK time. A few hours later, and ReCode was reporting that Apple is planning no such thing. Of course plans change all the time, and record labels can get angry. So who knows what the truth of it was. But I think the piece stands either way.

On Sunday, after a week or so teasing the internet by turning their website to pure white and closing various accounts, Radiohead released their new album, A Moon Shaped Pool. I was able to head off to their website and buy a download instantly.

I’d given Radiohead some money – cutting out middlemen retailers as it happens – and they’d given me some files that, as long as I’m careful, will be playable for years to come.

This is essentially the same kind of transaction I’ve been conducting when I buy music, since I was a child.

But we are in the early 21st century, and it’s all about streaming. So if I hadn’t chosen to spend £9, how else could I have listened? Well, there’s Apple Music or Tidal. The new album is available to stream on both platforms.

Notably though, it’s not on Spotify.

No skin off my nose, as I don’t pay for a premium Spotify subscription, and only every rarely listen to the free service.

But if I was a different – probably younger – listener, I might be a bit miffed. Because if I have a Spotify subscription, I’m unlikely to have either an Apple Music or Tidal subscription as well. Why would you pay twice for access to the same music?

And therein lies my problem with streaming services – they don’t always deliver. Indeed, Radiohead has reportedly been removing some of their other music from Spotify as rights return from their old label to the band itself.

So in that context it was interesting to read a report that suggests that Apple will phase out digital download sales from iTunes within the next two years. The US and UK are likely to be first!

[Update: Apple has quickly denied that it is planning to stop selling downloads according to ReCode.]

The thinking is this:

  • Download sales peaked a couple of years ago and are now falling.
  • In their place is rapdily growing subscription revenue, so why maintain a dual economy?

The article also mentions some Apple specific issues around matching music incorrectly, and “orphan tracks.” Those are a bit of a red herring though since they’re software issues that Apple could quite easily solve if it really wanted to.

iTunes Song Downloads

If download sales are in decline, then why should Apple bother continuing to support them?

But look at this larger picture chart of music industry revenues:

Infographic: Rise of Digital Music Stops the Industry's Decline | Statista

While digital overtakes physical, it doesn’t show a healthy overall picture, and that’s because streaming revenues don’t make up for losses from physical and downloads. Growth is actually coming from other revenue areas.

Special offers aside, the cost to a consumer of a streaming subscription is $120/£120 pa. Yet the average amount spent by British consumers on music currently is less than £40 a year.

By removing the option to buy, Apple is banking on a good number of current downloaders stepping up to become subscribers, yet for the “average” person, that involves a 200% increase in their music spending!

Well, good luck with that.

But my main issue is the one that I started with. Music rental removes my control over my music.

  • If EMI goes out of business tomorrow, my EMI CDs are still safe.
  • If Radiohead decides it doesn’t want to be on Spotify, my Radiohead CDs and downloads remain available to me.
  • If Spotify goes bust, I still have access to my music library.
  • If Apple Music puts its subscription rates up tomorrow, and I can’t afford the new price, I can still listen to all the music I own today.

It’ll be interesting to see how the music industry reacts to this story.

BBC Store – Initial Thoughts

After much ballyhoo, the BBC Store is finally with us, and well, um, it sells downloads and streams.

You buy episodes rather than rent them – although the prices are much of a muchness really with television. And then you play them back via the web, or in due course, mobile apps. To be honest, I’m surprised that the apps aren’t there at launch, but we’re told they’re coming.

Now it’s true that the BBC Store doesn’t offer particularly better value than other retail outlets. A few comparisons:

– Fawlty Towers costs £15.98 for two series on BBC Store, £14.99 on iTunes and £9 on DVD at Amazon
– Yes Minister costs £24.99 for three series on BBC Store, £9.99 on iTunes and £14.50 on Amazon (but you get two series of Yes Prime Minister in that boxset too!)
– Edge of Darkness costs £7.99 on BBC Store, £5.99 on iTunes, while the DVD is £4.17 on Amazon (an utter bargain whichever way)
– Planet Earth costs £10.99 for SD and £12.99 for HD on BBC Store, and the same pricing in iTunes, while the DVD is £7.71 and BluRay £10.90 on Amazon

(Note: I’ve not factored in the current 25% off they’re offering for introductory purchases)

Essentially the BBC isn’t able to undercut its rivals by selling programmes cheaper, but this random selection shows that it’s mostly more expensive.

However, if all of that sounds negative, then there is always the great redeeming feature of finding something you thought would never otherwise be available to buy.

I doubt that the current Helen Czerski series on BBC Four about Colour would have ever been made available to buy on disc, yet you can buy a download on BBC Store for a very reasonable £4.99 for the series.

Similarly episodes of BBC Four series Timeshift on some very esoteric subjects are also available to own; whereas they’d never have been made available to buy on physical media. Although it’s a shame that I can only see one episode of Arena (they claim two), which is the recent Nicolas Roeg edition, when I know there’s such a rich history to that series.

On the other hand, I’m not sure that there’s anyone alive who needs to own one of the 248 episodes (at time of writing) of Bargain Hunt that are available to own for £1.89 a pop, unless you actually appeared in it. In which case, didn’t you either record it at the time, or get the production company to send you a copy? But fill your boots otherwise!

Casualty isn’t the kind of series that regularly got DVD releases either, but there are 137 episodes (at time of writing) up for grabs if you just can’t get enough Charlie.

And every episode of Eastenders since August 2014 is there to buy too. (And there are over 400 episodes of Doctors come to that!)

I would imagine that the cost of adding programmes to the BBC Store is low, so putting these episodes online is probably near automatic and for the few devotees who do want to buy individual episodes then there’s minimal cost to stocking these programmes and selling them to those who want to own them. That’s the beauty of digital.

The store does let you know when episodes are still available to watch free of charge on iPlayer which is good, because episodes can reach the store as soon as they’ve aired.

Programmes usually include subtitling and occasionally sign language – almost certainly a rarity. And there is a parental lock available on programmes labelled as such. I must admit that I find these things fairly arbitrary – either being unrated (family friendly) or “G.” Who knows what determines a “G” rating?

But there are a few problems.

We’re promised mobile apps will follow, although I’d have thought that they should have been there for launch. And I can’t access my programmes from within the TV app versions of iPlayer right now. I can however reach them from the regular iPlayer site within My Programmes > Purchases. Again, we’re promised that this will be fixed in due course. This is all a bit unfortunate because I like to watch TV on, well, my television. I ended up using the Windows 10 app, and outputting the pictures via Micro DisplayPort on my PC to HDMI on my TV. All a bit messy really. Incidentally, there was a free Fast Show offer for users of the Windows 10 app.

It doesn’t make clear anywhere whether episodes are in HD or not – you have to click on a price before it tells you. Clearly that won’t be the case for older archive material, but it’d be nice to know from just looking at the programme that it is available in HD. I also don’t like the practice of hiding higher HD prices behind lower SD ones. Sky is also guilty of this.

And while we’re told that HD is at least 720p, my TV is capable of more than that. I’d like to know that I’m getting 1080p if the programme was made in HD, as I would if I bought a BluRay.

There’s a serious lack of meta data behind the store from what I can see. I can’t search by actor, writer or director, unless the store has already created a section for them – so I can search for Benedict Cumberbatch or Dennis Potter, but few others. That’s a big miss as both Netflix and Amazon realise a lot of people look for things starring particular people. It would be great for finding “before they were famous” appearances in Casualty and the like.

I did find some pricing oddities including a Timeshift episode priced at £1.89 for SD and £12.99 for HD! Definitely a mistake, and in any case, it’s a bit dubious having increased HD prices for a series made up largely of SD archive material anyway that for the most part has just been upscaled to HD.

The FAQ on the BBC Store downloader only mentions Windows 7 to Windows 8.1. They might want to mention Windows 10 – even just pointing you to the app (I searched for it in the Microsoft Store). Similarly OSX stops at 10.10 with no mention of the now current 10.11. And the use of Microsoft SilverLight for offline downloads is a serious disappointment since it’s no longer being actively developed by Microsoft, and support is beginning to be removed from major browsers as most video streamers move to newer technologies.

One download device per account is very stingy. Let’s hope that’s upped when mobile apps come along otherwise it’s unsustainable.

There are also issues around descriptions of programmes. It’s nice that I can buy BBC Proms concerts, but I’d probably have to go somewhere else to get a bit more information:

Episode 13: Friday Night at the Proms: Bernard Haitink Conducts
4 Sep 2015 120 mins
Schubert’s Italian Overture and Ninth Symphony, and Mozart’s A major Piano Concerto.

I’d also like to know the orchestra, and it wouldn’t be hard to include a bit of additional detail in there from the Proms website.

I note that they’re steering clear of allowing user reviews.

And of course everything is full of DRM meaning that long term, I can’t be certain I’ll have continued access. From the help section:

We cannot guarantee that you will be able to stream or download content that’s in My Programmes forever. However, when our right to make content available is due to expire, we will do our upmost to inform you of this by email so that you have the opportunity to download and then continue to playback the content through the BBC Store Download Manager.

If I had DRM free copies of course, I could make them part of my back-up regime, and should the BBC Store ever close down, I wouldn’t lose anything, or be reliant on technology that might have limited or no future support. This is the key issue with all DRM-d media, and it’s why for the most part I continue to purchase physical copies ahead of DRM-filled downloads. Even though there is encryption on DVDs and BluRays, they can be ripped, and I can maintain access once players become redundant (I confess, I’m not looking forward to days of ripping however).

But I will forgive an awful lot when I find a series I’ve been after for years, is now available to buy on the BBC Store. In this instance I’m talking about Tender is the Night, the 1985 Dennis Potter adaptation of the F Scott Fitzgerald novel with Mary Steenburgen and Peter Strauss. I’ve longed to be able to get hold of a copy of this, and missed the recent BFI screening. Curiously the series is not listed in the Dennis Potter section of the store.

For me, issues surrounding pricing and playback options at launch can be mitigated by depth of catalogue. So let’s see BBC Store add more classic material to its output. I’d like to see things that aren’t currently available on DVD or BluRay, but have never been released before.

So dig deep into the archive and surprise me! (And get those mobile and smart TV apps sorted out.)

Note: Prices correct on 20 November 2015 when I wrote this.

[To readers of James Cridland’s Future of Radio newsletter – welcome! I should point out that the BBC still has a BBC Shop – it sells physical discs and, er, Doctor Who Christmas jumpers. BBC Store is their online only operation. Interestingly when Google first opened their online offering in the UK they localised it to be the “Google Shop.” They subsequently reverted back to Google Store. Yes, it’s Americanised, but I’m not sure that it’s not the right name for a digital outlet.]

The Joys of Online Streaming Sports

Picture the scene.

You’re travelling and Twitter tells you that the final rugby World Cup quarter final is a tight affair. There are just minutes left, and a single score could send the match either way.

The final “northern hemisphere” side are fighting to stay in the competition.

You fire up ITV Player on your mobile. Be damned the streaming data cost! You’ll watch the last few minutes online as your train travels along a largely 4G route.

But first a pre-roll advertisement… which has to buffer before it plays.

You’re not interested. Time is ticking away. Sure, you know that commercial television is supported by commercials, but come on!

The ad ends and a loading icon appears… and appears… and appears…

Time passes.

Finally a second ad begins to play.

This is getting frustrating now. But you watch the ad as you have no other choice.

The ad ends and… another loading icon appears.

Oh COME ON! Not a third ad surely?

Well I couldn’t say for sure, because after about 30 seconds of that, I abandoned ITV Player, switched to iPlayer Radio, launched Five Live which booted up instantly and listened to what were now the final three minutes of the fixture.

Radio trumps TV.

(Or at least in the app world it does, particularly if it doesn’t carry ads).

Here’s a thought – if you’re down to the final scheduled few minutes in a live sporting fixture, then ditch the pre-roll ads. Because while pre-rolls are something the audience knows it has to “endure” ordinarily, they become a serious frustration at the end of a major fixture when the clock is ticking. And people swearing at your app and then going somewhere else is probably not what you’re after.

How Should Spotify Pay For Its Music?

Ooh Chris Martin on your Radio

Yesterday I got into a bit of a discussion with James Cridland on Facebook about the rights and wrongs of how services like Spotify distribute their revenues. And I thought it was worth sharing and expanding on some of my thoughts on the matter.

This comes off the back of a Medium piece from Sharky Laguana.

But I’ll preface things by reiterating that I don’t think the flat subscription model works at all well for the music industry. Go back and read this piece to understand why I say that.

Sharky explains how Spotify uses what he calls the Big Pool method of distributing royalties. He believes that the Subscriber Share method would be fairer.

Big Pool

The Big Pool method takes all the revenues that Spotify earn and attributes to rights holders – about 70% of the money subscribers give them – and then it divides that pot of cash by the total number of streams delivered. In his example, which uses December 2014 data, that means $0.007 per stream. Spotify then pays out that money accordingly, based on the number of streams each song has had.

I’ll leave you to read why he thinks this method is bad. But in essence it means that a large proportion of the money you personally give to Spotify each month goes to artists and rights holders that you don’t yourself listen to.

Subscriber Share

The Subscriber Share model works in a different way. It looks at each user’s listening habits and apportions the relevant money that subscriber pays (~70% of your monthly fee) to those artists/rights holders. Ed Sheeran might be one of the most popular artists on Spotify, but because I don’t listen to him, none of my subscription goes to him – it just goes to artists that I listen to.

So which of these methods is fairer?

I would actually argue that they’re both legitimate ways of dividing the spoils. The difference between them depends on how you look at an offering like Spotify.


  • Do you consider your usage in isolation: you have £9.99 to spend on music each month, how do you spread that out? Which artists do you apportion that money?
  • Or are you paying £9.99 for a service. Your cash pays for access to 30m+ tracks which you can listen to as much or as little as you like?

Spotify as a Service

Spotify treats the money in the latter manner. And this is not an uncommon way of doing things.

Think of your pay monthly phone tariff. For a flat fee the operator gives you unlimited calls and unlimited texts. I might be a relatively light user of the service, only speaking for a couple of hours a month or sending a handful of texts. You might live your life on the phone and send hundreds a texts a day (OK – I know all the kids are on WhatsApp or whatever, but you get the point). The operator prices its products on the overall usage. It has inter-network fees it has to pay, and it needs to make sure that the overall spread of usage is balanced out by the subscription fees it collects.

Or think of a gym membership. You and I both pay £50 a month. We can go as often as we like. But I’m lazy and I only go once a month. I should really cancel my membership. Each visit is costing me £50 a time! You go daily, and you get great value from your membership – use of all those facilities and only £1.50 a time! The gym needs to ensure that it collects enough subscription revenues to pay for itself and not be full the entire time.

At its very simplest, this is how our taxes work too. I don’t have children, but some of tax money is spent on schools. You might have a serious medical issue, and the NHS may offer treatment vastly in excess of the income tax or National Insurance you pay.

In terms of Spotify, some people get amazing value from the service – they listen morning to night and stream thousands of tracks. But most subscribers stream far fewer. There’s nothing to stop them streaming more, just as there’s nothing to stop you going back for seconds at an all-you-can-eat buffet. But some people are full after one trip, while others are students who want to get full value!

In terms of how artists and rights holders get paid, should this depend on how much I personally use the service? Or should it depend on the overall usage by all the service’s subscribers? After all, even without considering rights payments, someone who streams Spotify 10 hours a day is costing more in bandwidth than someone who streams for 10 minutes a day.

Think of it in “Entertainment Hours.”

Ed listens for 10 hours a day or 300 hours a month, while Taylor listens for just 30 hours a month.

Should each Entertainment Hour delivered to Ed be worth less than each Entertainment Hour delivered to Taylor simply because Ed uses the service more?

Indeed the Big Pool share is pretty consistent with how music is paid for in general. In UK radio for example, stations have to return a list of all the tracks they play, and royalties are calculated by simply dividing the stations’ royalties fees accordingly.

If I want to start an online streaming radio service, I will quickly discover that royalties are charged on a per-song/per-stream basis. In other words if there are 10 people listening to my service when a particular song is played, then it costs me 10x that per-song/per-stream price.

We Don’t Have The Data… But Denmark Does

None of what I’ve argued here should discount the Subscriber Share model as being a legitimate alternative method to paying out royalties, although I think you’d have to consider what Spotify is as a very different beast.

But to truly calculate the impact of one method of payment to another we need data. It requires a big bulk of real usage data sampled properly from the full Spotify subscriber base. Because it’s simply not possible to calculate which artists do better out of which system without access to that data.

In Sparky’s example, he points out that Alt-J might earn $1.75 from a single subscriber under the Subscriber Share method assuming that user plays them 25% of the time. Based on the same average usage, the band only receives $0.35 based on the Big Pool method.

But what that ignores is the overall playing of Alt-J across all users. If the Ed Sheeran/Taylor Swift playing mainstream, who account for the bulk of subscribers, also stream just a single Alt-J track, does that add up to more money? Under the Subscriber Share model, the amount might be incidental. But added up across many more listeners, could the Big Pool revenues actually add up to a similar amount? Without the data we simply don’t know.

Via a comment to Sharky’s Medium piece, I was directed to this fascinating Danish report based on a month’s worth of Danish streams via WiMP (available in Denmark, Germany, Norway, Poland and Sweden).

The report looked at the top 5,000 artists played across that month. Unsurprisingly the top 1% of artists accounted for 28.2% of streams, with the top 20% of artists accounting for 80.1% of streams. The tail gets long very quickly.

What the report also clearly showed is that people who listen to less popular artists also listen to more artists. And that doesn’t help the economics for those smaller artists.

“Because the most popular artists have the least intensive listeners, per user distribution [Subscriber Share] would generally move money from the tail towards the head.

“Among the top 5,000 artists, per user distribution would primarily benefit the most popular artists at the expense of the less popular. The top 1% among the top 5,000 artists would go from 28.2% of payout with the current model [Big Pool] to 31.0% of payout with the per user model [Subscriber Share]. Artists between 1,000 and 5,000 would go from 18.1% of payout with the current model, to 15.9% of payout with the per user model – a relative decrease of 12.1%.” [My emphasis]

This also goes back to my contention that the music industry loses out massively from its biggest fans by letting them have everything for a flat rate when they were previously spending much more.

Other Considerations

What happens to your subscription money if you don’t listen in a given month? Under the Big Pool method, it makes no difference. Your 70% rights share gets thrown into the pot. But under the Subscriber Share where does it go? Does Spotify just bank it? This isn’t quite as niche a case as you might think. Globally some mobile phone operators include Spotify Premium subscriptions in their packages, and not all of those subscribers will take them up on those deals, but revenues are probably collected. I know that I used to have a Deezer subscription via Orange that I essentially never used.

The major labels may also have determined minimum pricing per stream. Under the Subscriber Share model, it’s possible that the price paid per stream would drop, and that may cause issues.

And it’s worth noting that while I’ve no doubt that the Big Pool method works satisfactorily for the major record labels (they wouldn’t have signed up otherwise), it must surely do OK for the independent labels represented by groups like Merlin. Spotify et al need indie labels for their services. As well as some major superstars like Adele appearing on Indie lables, the services simply wouldn’t have the requisite breadth without them.

Summary

As I said right at the start, I wouldn’t argue that the Subscriber Share method isn’t a valid one, but it’s not as black and white an issue as might be painted. Spotify is a service, and like every service you use it to a greater or lesser extent. But it does at least treat artist equally, and each play is valued the same. So in that sense it’s equitable.

And the Danish report suggests that it’s actually a better deal financially for smaller artists. In fact it’s the biggest artists who should be complaining.