Why we need to stop comparing Netflix to Spotify
“Streaming video grew faster than streaming audio in 2015 in the US,” says Mark Mulligan of MIDiA Consulting, “with YouTube growing more quickly than everyone else.”
As competition between music streaming services continues and new players enter the streaming space, video-on-demand company Netflix is often held up as an example of a streaming business model that is both sustainable and (just about) profitable.
With good reason, too. Netflix currently has 75 million paying subscribers, buoyed by Netflix’s successful foray into original programming (House of Cards, Orange Is The New Black, Jessica Jones, and more).
But comparisons to streaming services often fall apart upon closer inspection. At Music 4.5: Converting Freemium last June, James White of Cooking Vinyl said, “[Netflix] is not comparable with music. TV has had a paying access model for years, versus music whose access models are still evolving.”
Different methods of consumption
Jean-Charles Lacoste of InPlayer agreed that user expectation of television content requiring some form of payment was well ingrained, over several decades. “HBO introduced premium content in the 1980s. The video space has had far less of a problem with getting users to pay.”
White cited the major differences in methods of consumption between music and video. “Video requires active engagement with your eyes and ears. Also, users tend to watch something only once.”
Still, this hasn’t stopped more recent analysis over whether Spotify and Deezer can garner lessons from Netflix’s success, raising the question whether original, exclusive content is the next differentiating step for streaming services?
“…turn TV into the iPod of the living room…”
Music Ally reported that David Emery of Kobalt believed the answer to be a no. “If there’s a record that’s exclusive to one platform, rather than going to the effort of switching platforms to listen to it… I’ll just listen to something else.” He cited music’s lack of scarcity – compared to that of television – as a main reason why exclusive content with music won’t catch.
Emery instead believes that the learning from Netflix’s success is down to embracing how users are now interacting with their televisions. “TVs are probably the best way most people have to listen to music at home… Someone is going to turn the TV into the iPod of the living room. I wonder who it will be?”
“….cable TV is a dying breed…”
YouTube’s chief business officer Robert Kyncl no doubt disagrees. He believes that the move is actually away from television, with his prediction that web video viewership set to make up 60% of all video consumption by 2020. It speaks to a larger trend perhaps that is away from television, one that sees music and video consumption remaining the domain of smartphones and tablets. “It goes without saying that TV is moving to the Web, and that cable TV is a dying breed,” wrote GadgetReview (in its reporting of rumours that Spotify was considering making its own movies).
YouTube still reigns supreme
The idea of exclusive content is far from new, but the Netflix-like model has yet to find a place among streaming services. Comparing streaming to these kinds of services only serve to ignore the larger, more obvious comparison: YouTube.
YouTube is unique in that it straddles both Netflix and music streaming in terms of types of content consumed (video and audio), but at the moment, any artist wanting to provide fans with exclusive content should look to the Google-owned platform – in part because of its universality and ubiquity. It currently dwarfs television for combined music and video consumption, which we explored last week at Music 4.5: The YouTube Paradox.
And it’s YouTube Red – making waves in the US and set to come to the UK this year – that is already successfully applying a Netflix model. Google isn’t messing around in trying to compete with Netflix, already commissioning TV-esque content from its existing roster of hit-making stars. It’s still early days, but YouTube Red has already become one of the top 3 downloaded apps of last quarter, and it will become clear in the next few months how much its original content draws in users.
So, is all hope lost for streaming services hoping to mimic Netflix’s success?
Perhaps not. Emery believed that it is independent artists that could stand to benefit from streaming services trying to bundle exclusive content. But as with all things in the music industry, if it’s not profitable, it won’t see the light of day. Any rising star emerging out of a streaming service will not want to be confined to one platform. For audio streaming services to compete on any level, they will need to offer video streaming (which Spotify has just done with brands such as NBC and the BBC). It’s hard to imagine that mini clips and video segments put music streaming on par with YouTube and Netflix, but it’s worth watching and waiting. We may be surprised yet.