TIME Companies

Get Ready, SoundCloud Users: Ads Are Coming

Lorde performs during Lollapalooza 2014 at Grant Park on Aug. 1, 2014 in Chicago.
Lorde performs during Lollapalooza 2014 at Grant Park on Aug. 1, 2014 in Chicago. Theo Wargo—Getty Images

But you may soon be able to skip the ads by paying for a subscription

SoundCloud, the popular free music-sharing platform that’s helped artists like Lorde skyrocket to fame, is introducing advertisements to its service.

The company said Thursday that select content creators will be able to authorize playing ads beside their tracks and collect some of the revenue from those ads. The ads will first roll out in the U.S., but they’re expected to appear for international users soon, SoundCloud announced.

Ads mark a big step for the music streaming service, which has struggled to monetize its vast user base that includes some 175 million listeners a month. Until now, the service has earned revenue by charging some of its most active content providers.

SoundCloud Chief Business Officer Jeff Toig told the New York Times that most of SoundCloud’s ad revenue will go to content providers, including Sony/ATV, BMG, the comedy show Funny or Die, and independent rapper GoldLink, for example. SoundCloud has already signed up Red Bull, Jaguar and Comedy Central to run ads on the platform, according to the Times.

But you may soon be able to skip the ads, if you’re willing to pay. The Times reports that, over time, the service plans to roll out subscription plans for listeners who want to skip the ads, much like you can do on Spotify, another music-streaming service.

TIME Companies

Google Buys Music Streaming Service Songza

The music streaming service says its product will remain unchanged, for now

The music streaming service Songza announced Tuesday that it’s being purchased by Google, adding to the tech giant’s already sizable presence in the online music sector.

“We can’t think of a better company to join in our quest to provide the perfect soundtrack for everything you do,” Songza said in a statement. “No immediate changes to Songza are planned, other than making it faster, smarter, and even more fun to use.”

Songza didn’t reveal a purchase price. The New York Post, citing unnamed sources, reported last month that Google was offering about $15 million, far less than the billion-dollar-plus valuations of online music behemoths Spotify and Pandora. Songza streams music in “smart playlists” curated by experts and tailored to an individual users habits.

The acquisition adds to Google’s subscription music service launched in 2013 as well as its ownership of YouTube, already a heavyweight in the online music sector, which the company says will be launching a paid streaming service.

The news comes after Apple’s announcement in May that it would buy Beats Electronics, which sells high-end audio equipment in addition to a music streaming service.

TIME Telecom

Streaming Music Won’t Count Against T-Mobile Data Plans

Wireless carrier T-Mobile will soon begin allowing customers to stream as much music as they want from services like Spotify and iTunes Radio. The company announced Wednesday that it will no longer count music streamed from select services towards customers’ monthly data usage limits.

The services currently included in the program are Pandora, iHeartRadio, iTunes Radio, Rhapsody, Slacker, Spotify and Milk Music. These options comprise about 85 percent of the music streaming traffic on T-Mobile’s network, the company said. Customers can vote via social media on other services they’d like to see included as well.

The move will allow avid music listeners to do considerably more with their monthly data allotment. A person that streams music for 50 minutes a day uses about 1.5 GB of data per month just for that task, according to T-Mobile’s own data calculator. If unchecked, such use can lead to huge overage charges on competing carriers’ networks or throttled speeds on T-Mobile (the carrier eliminated overage charges earlier this year in favor of slowing down service for people who use more than their allotted data).

The new feature has similarities to AT&T’s Sponsored Data plan, which alllows companies to pay AT&T to let customers use apps or websites without eating into their monthly data allotment. Some have said that these concepts violate the ethos of net neutrality, which discourages companies from granting preferential treatment in the way they deliver certain types of data across the Internet — though net neutrality rules have not previously applied to mobile Internet use.

Unlike AT&T’s Sponsored Data program, though, T-Mobile will collect no fees from the streaming services that are granted unlimited streaming.

In addition to lifting data caps on music streaming, T-Mobile also announced a new streaming service of its own, called unRadio. The new, on-demand service, made in partnership with Rhapsody, has a catalog of 20 million songs and no ads. It will be free for T-Mobile subscribers with an unlimited data plan and $4 per month for subscribers with more limited plans.

The new programs are the latest steps in T-Mobile’s “Un-Carrier” initiative, which has introduced several disruptive concepts to the wireless industry, such as the elimination of two-year contracts and international data charges. The cost-cutting measures are making T-Mobile bleed money, but they also helped the carrier gain more new subscribers in the first quarter than AT&T, Verizon and Sprint combined.

TIME Music

YouTube Removing Indie Bands’ Videos Ahead of Streaming Music Launch

Adele - Waxwork Unveiling
Adele's new waxwork is unveiled at Madame Tussauds on July 3, 2013 in London. Fred Duval—FilmMagic/Getty Images

YouTube is deleting certain indie bands' music videos over contractual disputes ahead of a streaming music service launch

Update Wednesday, June 18 at 10:13 a.m.

YouTube may be aiming to become more of a player in the streaming music game, but some indie labels might not be along for the ride.

In the coming days, Google-owned YouTube is planning to begin removing videos from certain independent acts because their labels could not come to an agreement on YouTube’s revamped royalty terms, according to the Financial Times. The dispute means that videos by artists like Adele and the Arctic Monkeys could be removed in certain markets.

The deals with independent labels have been a sticking point in the development of YouTube’s subscription-based music service, which was originally expected to launch early this year. A trade association that represents independent labels issued a public statement in May claiming that YouTube was trying to strong-arm smaller labels into accepting non-negotiable terms that would offer smaller payouts than competing services such as Spotify and Deezer.

YouTube has declined to comment directly on the negotiations, but it has said the new streaming service will generate more revenue for labels and artists. “Our goal is to continue making YouTube an amazing music experience, both as a global platform for fans and artists to connect, and as a revenue source for the music industry,” spokesman Matt McLernon said in an emailed statement. “We’re adding subscription-based features for music on YouTube with this in mind — to bring our music partners new revenue streams in addition to the hundreds of millions of dollars YouTube already generates for them each year.”

It’s not clear how widespread the video removals will be. Robert Kyncl, YouTube’s head of content and business operations, told the Financial Times that YouTube has reached deals with about 90 percent of the music industry, including the three major U.S. labels. The remaining labels’ videos will only be removed in the markets where they distribute music—so, for instance, some Adele videos might go offline in the UK, where Adele is signed to independent label XL, but remain available in the U.S., where Adele has a deal with Columbia Records.

YouTube’s new, on-demand paid streaming service is expected to allow users to more easily organize songs by album, listen to songs via YouTube while using other mobile apps and download songs for offline listening. It will enter a crowded market that now also includes Amazon, which launched a music streaming service this week, and Apple, which is buying Beats’ headphone line and music streaming service for $3 billion.

Update: McLernon, the YouTube spokesman, later clarified that the videos in dispute will not be permanently deleted from YouTube in any markets but will instead keep their viewcounts, comments, likes and presence in users’ playlists in case they are later restored.

MONEY online shopping

It Doesn’t Matter That Amazon’s Music Streaming Service Is Lame

listening to bad music
Monalyn Gracia—Corbis

Last week, Amazon introduced Prime Music, a streaming service included in a Prime subscription that scared … absolutely none of the big music streaming competitors.

Within hours of Amazon introducing its music streaming service, Prime Music, the consensus among critics and observers is that the service is … okay.

While Amazon played up the fact that Prime Music has “unlimited, ad-free streaming” and a catalogue of “over a million songs,” anyone and everyone evaluating the service was quick to point out that players in the streaming scene such as Spotify have well over 20 million songs. “It’s hard to tell who is the target audience for Amazon’s service. If it’s a consumer mass market play, there are still some big gaps,” TechCrunch observed, noting that 9 of the current top 10 in the Billboard Top 100 were not available last week via Prime Music streaming.

Businessweek called the service “half-baked,” declaring “there is little reason to believe that Prime Music will lure people away from Spotify or Rdio.” The tech columnist at USA Today agreed: “If you’re already a paying subscriber to Spotify, or huge fan of Pandora, nothing in Amazon’s new Prime Music offering, introduced Thursday, will make you want to switch.”

Prime Music’s reception in the marketplace bears an eerie resemblance to that of another streaming service, which also happens to be an Amazon product. Tech and entertainment writers have long argued that Amazon Prime’s streaming video options were no match to Netflix, which has a far more robust catalogue of TV shows and movies.

When Prime Instant Video was still new, critics bashed its “dismal lack of popular and recent titles.” Likewise, music critic Bob Lefsetz called Prime Music a “disaster” because, among other reasons, there are so many holes in the catalogue it’ll inevitably frustrate subscribers. “Now Bezos wants me to waste time, which nobody has any of, to click around and find the music I want to hear on his service, ultimately being disappointed in a fair share of my efforts?” Lefsetz wrote. “This is not a benefit, this is a DISTRACTION!”

Much of the Prime Music criticism is completely valid. But it probably doesn’t matter. Amazon customers are not only likely to see Prime Music as a benefit, but as the best kind of benefit, one that’s totally free, passed along by those generous benefactors in Seattle. Amazon Prime was born as a two-day delivery service—buy as much as you want on the site and get two-day shipping for $79 annually—and that’s what the average subscriber still thinks he’s paying for. All the extras, including video streaming, some free Kindle ebook rentals, and now, Prime Music, tend to be viewed as just that, as perks or extras.

It’s hard to complain about a service being somewhat subpar when the service being provided is free. Or at least when it feels like the service is free. Of course, you’re paying for the service, via your subscription fee—now $99, up from the original $79—plus all of those purchases you’re making at Amazon. But it still sorta feels free. For that matter, the “free” two-day shipping isn’t really free either; it’s more like a flat prepaid payment of $99 for a year’s worth of shipping.

By bulking up what’s included in the Amazon Prime service package, Amazon is using a tactic out of the storied cable TV bundle playbook. The average pay TV subscriber watches only around 17 channels, yet his package includes 100, 200, perhaps 700 more options. Paying $90 per month for a mere 17 channels sounds like a lot. But when that $90 gives the customer a bundle of 600 channels, it feels like a much better value—even if you never watch 573 of them. Similarly, Amazon Prime members are likely to feel like they’re getting good value for their Prime bundle, even if they rarely or never take advantage of the streaming options and other extras.

Just knowing that these extras are part of the package helps convince some consumers that a Prime membership is worthwhile. And if they actually use those streaming options for hours and hours, week in, week out? That works out well for Amazon too, because the more time spent on the site, the more likely a subscriber is to be tempted into making purchases. And the more likely a subscriber is to feel that an Amazon Prime membership is an absolute essential. Subscribers will only head more in that direction as Prime Music adds to its song list, which is sure to happen in the same way that Prime Instant Video has expanded its catalogue, adding HBO shows like “The Sopranos” in April.

And hey, remember, it’s all free for Prime subscribers!

TIME

Surprise! Amazon Launches Streaming Music Service

Like a ninja in a library, Amazon has quietly launched Prime Music, a streaming music service similar to Spotify, Rdio and others.

If you’re a $99-per-year Prime member, you’ll have unlimited access to north of a million songs, which makes Amazon’s library far smaller than its competitors’ libraries. Spotify, for instance, boasts over 20 million songs.

But this is another added nicety for Prime subscribers, who, for $99 a year, get free two-day shipping on a bunch of Amazon products, a free Netflix-like video service, a handful of freely borrow-able Kindle ebooks and now, free music to boot.

The fact that Prime Music was launched without much fanfare likely means that Amazon isn’t looking to try to lure people away from competitors — not yet, anyway. If the company builds up the music catalog in the coming months, however, it could serve as an interesting underdog.

As for what you actually get with Prime Music, there are no ads and you can listen to as many songs as you like. Songs can be downloaded for offline listening, though you’ll have to listen to them through Amazon’s music app, which is available on most popular tablet, smartphone, web and computer platforms. Here’s a list of available songs.

Amazon is expected to launch its own smartphone on June 18, so we’ll see how much the company’s new music service plays into the phone’s launch.

TIME music streaming

Spotify and Beats Are Locked in a Price War

It’s not just Dr. Dre and Jimmy Iovine who will be getting richer because of Apple’s $3 billion purchase of Beats Electronics — music fans might start saving some scratch, too. Beats and Spotify have both recently slashed the prices of their music streaming services, a sign that the long-standard going rate of $9.99 per month may be falling.

Beats fired the first salvo last Wednesday, dropping the annual subscription price of its service from $199.88 to $99.99 (monthly subscribers don’t qualify for the discount). Spotify fired back today with a limited-time offer of a three-month premium subscription package for just $9.99.

The price drops may indicate that streaming services will have to find a new monetary sweet spot to truly reach a mass audience. An analysis by Re/Code recently found that the average music fan spends between $48 and $64 per year on music, considerably less than the $100 and $120 that Beats and Spotify ask for, respectively. Spotify’s deal only runs through June 15, but the company could face growing pressure to permanently match Beats’ price. Though Spotify is the clear leader in the field with 10 million paying subscribers, Beats will benefit from tighter integration into Apple’s products and access to the tech giant’s endlessly deep pockets. The company also has its own high-margin profits from its billion-dollar premium headphone business.

Spotify, by contrast, is a money-losing venture that is essentially trying to grow its way to profitability. Slashing prices will make that goal harder, but with Apple more active in the streaming space and Google prepping a music-focused version of YouTube, charging $9.99 per month may not be an option much longer.

TIME technology

Music Industry Guru Totally Destroys the Apple-Beats Deal

Beats By Dr. Dre & GRAFF Diamonds Special Event
The Million Dollar Headphones by Beats by Dr. Dre & Graff Diamonds, displayed on January 31, 2014 in New York City. Noam Galai—2014 Getty Images

Music industry critic Bob Lefsetz is not a fan of Apple’s reported plan to buy Beats Electronics for $3.2 billion. The writer known for calling out industry bigwigs by name took to his blog to outline many reasons why the acquisition would be a desperate move on Apple’s part.

“Tim Cook is an operations guy, he’s clueless, the company has no vision and this is evidence of it,” Lefset wrote. “Anybody with a brain knew that streaming was eclipsing downloads. Except at Apple, where they were adhering to Jobs’s philosophy. But it turns out Apple had no Plan B, no streaming service ready to be launched when necessary. It’s like they never read Clayton Christensen’s Innovator’s Dilemma, despite it being vaunted in the tech press for over a decade. If you rest on your laurels, you’re gonna be history tomorrow.”

Lefsetz went on to say that we no longer live in an “Apple world” because the company can’t release dominant new products like the iPod, iPhone and iPad. He also speculates that Apple is mainly after Beats Music, the Spotify-like on-demand streaming service launched in January, and not the Beats by Dre premium headphones that are the core of Beats’ business. “Jimmy [Iovine] insisted upon selling the whole thing,” Lefsetz wrote. “Makes sense, it gives Apple the illusion of cash flow/profit and it allows Jimmy to take his money off the table all at once.”

Though Lefsetz said that Iovine’s deep industry connections would be a boon for Apple, he mocked the actual products Beats produces. “Jimmy has created nothing other than wealth,” he said. “The headphones are mediocre and Beats Music is a me-too service. There’s no story here. Other than a desperate company making a deal with someone with something they need.”

Apple’s acquisition of Beats, which was widely reported Thursday, could be officially announced as soon as this week.

TIME technology

I Haven’t Updated My iTunes Software Since 2011. That’s Why Apple Needs Beats

The Apple logo hangs inside the glass entrance to the Apple Store on 5th Avenue in New York City,
The Apple logo hangs inside the glass entrance to the Apple Store on 5th Avenue in New York City, April 4, 2013. Mike Segar—Reuters

Apple is reportedly considering buying Beats Electronics for $3.2 billion. The deal, if it comes to pass, is shocking for many reasons—because Beats is in the middle of an aggressive expansion of its own brand with a new on-demand streaming service; because Apple has historically shied away from big purchases; because CEO Tim Cook just said company isn’t trying to make acquisitions just to generate a lot of buzz. Whether or not the acquisition actually happens, the mere fact that it’s being considered illustrates the huge shift that has occurred in the digital music landscape over the last decade. Apple is no longer the bellwether for what is cool.

I remember unboxing my first iPod, a 20 GB white, fourth-generation one that I got in 2004. At the time, it was a revelation: I could dump my bulky CD booklet in favor of a pocket-sized device that held 20,000 songs. My range of musical tastes exploded, and the idea of listening to songs from entirely different genres back-to-back became natural. Apple’s brilliant marketing, featuring dancing silhouettes rocking out to U2 and Daft Punk while wearing those iconic white earbuds, made all my high school friends immediately envious of my new toy. The surging importance of singles over albums, the multi-genre music festivals that are now summer staples and the frenetic mashups from artists like Girl Talk all owe some debt to the iPod, which taught a generation of listeners to enjoy music in an entirely new way. “Apple profoundly changed the way the recorded music business did business,” says Catherine Moore, associate professor of music business at the Steinhardt School of Culture, Education and Human Development at New York University. “They changed the pricing structure, they changed the distribution structure, they changed the listening experience.”

But that was a long time ago. While Apple has ably transferred its cool cachet to other, more profitable devices, such as smartphones and tablets, its place at the center of the music ecosystem has faded along with the iPod. If I’m listening to music on my phone or at my desk these days, it’s probably through Spotify or YouTube. Sure, my iPhone is essential to accessing music on the go, but it’s just the device I happen to use to open a non-Apple music streaming service. I haven’t updated the iTunes software on my PC since 2011. I no longer need Apple to organize or acquire my music.

I am not the only one whose habits have shifted. Digital download sales for individual tracks declined for the first time ever in 2013, dropping six percent. They slid another 12 percent in the first quarter of this year, according to Nielsen. Revenue from streaming services, meanwhile topped $1 billion for the first time last year. The transition to streaming music instead of downloading it has happened faster than many in the music industry predicted, and it’s seemingly caught Apple flat-footed. The company has offered up some solutions—a Pandora-like service called iTunes Radio and some windowed exclusives like Beyonce’s latest album. But Pandora’s number of active users are up since iTunes Radio launched last fall, and no number of timed exclusives can change the fact that many people want to have simple access to all music at all times. It’s clear that iTunes’ music download business is past its peak. “It’s still a strong brand, but there’s no doubt that other offerings have captured increased mindshare relative to just a few years ago,” says Bill Kreher, an Apple analyst at Edward Jones. “But I believe it extends beyond iTunes to the Apple brand itself.”

Enter Beats. The company launched by Dr. Dre and Jimmy Iovine took a niche product—premium headphones—and turned it into a $1.2 billion business. You can’t step onto a New York subway train without seeing at least one pair of Beats, illustrating the grip the brand currently has on youth culture (even as critics gripe that their products are overpriced, just like Apple’s). Young people today are envious of those giant headphones the way my friends were of my iPod a decade ago.

Perhaps, then, Beats is the quickest way for Apple to reclaim its position at the epicenter of the music world. The company’s headphones are already a huge business in a market Apple doesn’t currently address. Beats also has ironed out deals with all the major record labels to launch its streaming service Beats Music, which boasts a slick, intuitive mobile interface that would make Steve Jobs proud. It’s not clear how many subscribers Beats has, but reports indicate that many of the people who are being offered free trials through Beats’ deal with AT&T are becoming paying members. “Beats Electronics has a giant business that transformed and now dominates its category,” says Larry Miller, a music business professor at NYU. “If the nascent Beats Music streaming service is included, this deal could provide an outstanding flanking strategy for Apple’s declining iTunes Music download business.”

Still, it’s a decidedly un-Apple move to simply buy up cool. The company typically innovates its way out of trouble instead of opening its checkbook. A Beats purchase would be an admission that there are some problems that Apple can’t solve internally. “Apple has always been known as the innovator with the sort of perfectionist mentality,” Kreher says. “The sense is that innovation is slowing. It’s evidenced by a lack of new game-breaking types of products.”

Make no mistake: as the single largest music retailer in the world, Apple is still supremely important to record labels and artists, with or without Beats. And declining music sales mean little for the company’s bottom line. Overall, Apple’s digital sales were up 11 percent year-over-year in the most recent quarter thanks to the continued popularity of mobile apps.

But music is integral to Apple’s DNA in a way that extends beyond the balance sheet. It’s what first defined the resurgent tech giant in the early 2000’s, and it is still often used as a central element of the company’s marketing. Music is part of what makes Apple cool, and the company doesn’t want to lose that. “iTunes is a tastemaker,” Moore reminds us. “There’s a reason for people to think of Apple as being something that is in the midst of everything that’s new, that’s in the midst of launching new careers for creative people. That’s something that only enhances their brand as a computer innovator.”

TIME Media

Spotify Aims for U.S. Expansion Through Sprint Deal

Sprint customers will be able to take advantage of lengthy free trials and discounted subscriptions to the streaming music service, in a deal that could see Spotify broaden its user base

Spotify has finally nailed down a key partnership that could help it reach a larger audience in the United States. The music streaming service announced today that it is offering extended free trials and discounted subscriptions to Sprint customers.

All of Sprint’s nearly 30 million postpaid customers will qualify for a three-month free trial to Spotify. Customers on Sprint’s multi-line “Framily” plans will get six months of free Spotify, then pay a discounted rate of $7.99 per month or $4.99 per month depending on how many people are on the plan. Spotify regularly costs $9.99 per month.

Partnerships with telecoms providers are a holy grail of sorts for streaming services, which are used heavily on mobile devices. With the Sprint deal, Spotify will be able to slide its fees directly into customers’ cellphone bills, making for a more seamless payment process. The deals are also an opportunity for exposure to a broader market of customers who may not be familiar with on-demand streaming apps. Beats Music, for instance, launched a high-profile campaign with AT&T earlier this year that offers discounts to AT&T’s wireless subscribers and features television commercials with stars like Ellen DeGeneres and Run-DMC.

Spotify remains the leader in the music streaming space, with recent reports indicating that its paying subscriber base is approaching 10 million. Beats, a similar service from Dr. Dre and Jimmy Iovine, is the newcomer with the deepest pockets and the highest pedigree. However, the service is reportedly off to a modest start since its January debut, with Billboard reporting a subscriber count in the “low six-figures.”

The Sprint deal takes effect online on May 2 and in stores on May 9.

 

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