Streaming Music Trend Proves You Must Be Able to Evolve Your Monetization Models

Streaming Music Trend Proves You Must Be Able to Evolve Your Monetization ModelsIn recent days newspapers, like the New York Times, the Washington Post and USA Today, have reported that music streaming is starting to supplant downloads. According to one market research survey, streaming was up 42% through the first six months of 2014 compared to 2013, while download sales declined 12% in the same period.

While music tastes and preferences are constantly evolving, amazingly what is also evolving is how we consume music─ from concerts, to records, to CD’s, to downloads, and now to streaming. Who would have guessed that distribution – not the music itself – would be the golden ticket in this industry?

Consumers are notoriously fickle and streaming-delivery represents the latest “mousetrap” because it suits our consumption desires better. For instance, it supports our preference to gather personal music libraries rather than collecting artists’ albums.

This rapid transition the music industry is making to streaming is proof of just how powerful it is to accommodate consumer preferences as they evolve: If a company can support a whole new way of selling a product, it can disrupt an entire industry.

Monthly subscriptions to stream music are disrupting those businesses that thought they knew that consumers wanted to download music titles. Apple discovered this to their dismay when they realized that their traditional download business was being upended by a playlist of upstarts who were serving the demands of music consumers with subscriptions.

Nothing is more mainstream than music, so if customers are voting with their dollars to stream, not download music, it’s only further proof that evolving a monetization model until it hits a nerve with consumers is the way to go.

Look at the incredible impact that the music industry has experienced of late: Apple recently announced that it had purchased the Beats streaming service for $3 billion, making a billionaire out of L.A. rapper Dr. Dre earlier this year. Google’s $39 million purchase of Songza, which provides its customers with the ability to assemble and stream customized playlists, shows Google’s scramble to keep pace with streaming services such as Rdio and Spotify. In May, Google launched its streaming service for $10 a month. Even a number of local public libraries are starting to offer streaming of their album collections to interested patrons.

The only “gotcha”, and it’s a big one, is that companies evolving monetization models need to understand that it requires not only new knowledge and skills, but agile systems to carry out successfully. That’s because successful businesses, particularly recurring revenue businesses like those in the music streaming industry, are ultimately about meeting changing demands of customers over time. If done right it can mean a lifetime of happy customers, and also predictable, growing revenue. And who doesn’t want that? The music industry found out they did.

Brian James


About the Author

Brian James
Brian helps customers understand the power of recurring revenue and how it can effectively drive innovation, efficiency, and greater revenue growth. Brian has helped companies use technology to drive innovation and efficiency for over 20 years at both large and small companies including Accenture, Oracle, Mercury, Kintana, Engage, and others.

The Forrester Wave: Subscription Billing Platforms, Q4 2015

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