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04/16

Exclusives Power the Next Generation of Online Radio Competition

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Once it was enough just to stream whatever the music industry pumped out. The marketplace was littered with online radio alternatives large and small.

This was fine when there was nothing but blue sky and everyone was land-grabbing to scale distribution as quickly as possible.

But now the online radio ranker has winners and losers – stars and dogs. And nothing perpetuates stars like stardom. So how do the challengers disrupt the leaders?

Apple has one answer. Apple is not typically thought of as a challenger, but it certainly is one in the online radio space, and as the company readies a subscription-based Beats relaunch they will look to splash and splash big.

Several days ago, Bloomberg reported that Apple’s strategy would be to secure new music exclusives from some of the industry’s hottest artists:

Apple Inc. has asked Florence and the Machine and more than a dozen other artists for exclusive deals to promote a revamped Beats Music, and persuade people to ante up for what they’re accustomed to getting pretty much for free. The company’s in talks with the British group, which is set to release an album in June, about giving Apple limited streaming rights to a track, and has approached Taylor Swift and others about partnerships, according to people familiar with the matter. The idea is that exclusives will be bait for music lovers loathe to pay for subscriptions.

This is much more than artist-selected playlists or special versions. Apple’s wallet is fat enough to do what no radio broadcaster has ever had the leverage to do: Pay for exclusive rights (most likely for a limited time) to what will surely be hit songs.

Love Taylor Swift? There may be only one place to buy her newest song for days, weeks, or even months. Indeed, it’s possible that there could be only one place even to hear the song (legally, at least) for some time.

This constitutes a significant new level to competition for music listeners online and could spill over into what music is available to audiences for free offline. Certainly, if Taylor Swift’s newest song is for sale to the highest bidder, then what’s to keep any one broadcaster from bidding high enough to lock out their competition? In effect, this is what movie studios or TV networks do when they bid for distribution rights for the hottest new shows from the hottest producers, writers, and stars. And if the exclusives are limited in time, then it’s the musical equivalent of the distribution windows that give exclusive rights to movie theaters for three months before a film heads to VOD and DVD.

Are we entering an era when iTunes/iTunes Radio/Beats is the only place to hear, let alone buy, the latest song from one of your favorite artists for weeks or months?

Are we entering an era when any major broadcaster could lock out other broadcasters from playing a particular song (if the price is right) until the novelty wears off? Not only is this not payola, it’s the opposite of payola.

Once upon a time labels wanted to buy airtime because music was abundant but distribution – airtime – was scarce. Now both music and distribution are abundant.

In this time of abundance where whatever you want is a tap or two away, the only scarce thing remaining is talent.

Look for its value to rise.

Would it be advantageous for LA’s KISS FM to have a new song from a hot artist that AMP Radio was contractually restricted from playing?

What do you think?

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