Napster announced it will run iHeartRadio’s new on-demand streaming service. Also, the first fan-curated music festival was announced. And YouTube paid out over $1 billion in advertising revenue to the music industry in 2016.
Napster Taking on iHeartRadio’s New On-Demand Service
Napster signed a deal with iHeartRadio to run iHeartRadio’s new on-demand, $9.99-per-month streaming service, iHeart Radio All Access.
According to Music Business Worldwide, the iHeartRadio app currently provides access to over 850 live local radio stations.
Napster is turning into an unorthodox streaming service. It turned a profit of $1.63 million in the last quarter, said a quarterly filing from RealNetworks, thanks to staff layoffs led by new CEO Mike Davis. Napster had just under 3.5 million subscribers.
iHeartRadio recently hit 90 million registered users, up from the 80 million it had in January and now plans to try to upsell them into paid subscriptions. iHeartRadio will offer two paid streaming tiers: All Access, at $9.99 per month and iHeartRadio Plus for $4.99 monthly. The company’s on-demand streaming is currently in beta, but will launch in January.
Napster CEO Mike Davis said, “At Napster, our focus is on partnering with companies across verticals that share the same passion for creating great customer experiences and powering emotional connections every day.”
Further, he announced, “Adding iHeart to our portfolio of world-class partners is an honor … We’re excited to work with iHeart and other industry partners including UMG, Sony WEA and the indie music label community to help grow the proliferation of streaming music and reach more people with music beyond our traditional D2C business.”
Napster is fully licensed, which will allow iHeart to avoid having to get licenses from all three majors and the independents. Experts suspect this deal is iHeart testing out the on-demand market to see what conversion rate they can get before committing to building its own systems in house or acquiring a company like Napster.
Pandora is also building its own on-demand service using the now-defunct Rdio’s technology due for launch in early 2017.
On December 2, Darren Davis, president of iHeartRadio expressed, “We’re excited to launch our new services in beta today and introduce on-demand features and functionality to the mass market like no other service available … The Napster team is a great partner for us, and with their technology capabilities, scalability of their platform, flexibility and deep knowledge, we can deliver a best in-class on-demand music streaming service to our hundreds of millions of listeners across the country.”
Firefly Becoming First Fan-Powered Music Festival
The 2017 Firefly Festival in Dover Delaware will be the first fan-curated festival in the U.S., reported Billboard.
The event’s website announced that next year’s edition will let concertgoers vote on the lineup and also vote on changes to campsite activities, merchandise, food vendors and Firefly’s overall look.
A letter from the organizers explained, “What is a fan-curated festival? Let’s start from the beginning. Hopefully you are all aware of the talent survey that we release each summer … Since 2013, surveys have completely revolutionized our approach to booking the Firefly lineup. The results provide direct insight into what you want. As the lineup morphs and changes – as acts confirm or pass – we revisit your feedback to guide our next move. Over the last four years, we have booked 31 of the top 40 mid-tier acts and 7 of the top 10 headliners.”
The festival has hosted acts like Blink-182, Earth Wind & Fire and Busta Rhymes as well as the Foo Fighters, Red Hot Chili Peppers and The Killers.
The “unusual” format of the festival has caused some disappointment when hotly-sought-after acts couldn’t be secured, but according to organizers, it also leads to greater investment from fans, who have a stake in building something together.
Organizers explained they thought, “Why can’t we work together to create the entire Firefly experience?” That was when they came up with the idea for a fan-curated festival.
From now until the festival on June 15, attendees can visit the website and social pages to participate in polls, surveys and message boards and give feedback, cast votes and share thoughts on camping, merchandise design, intramural sports events, new festival attractions and art installations.
Organizers said they will have up to 40 surveys between now and the start of the festival along with incentives for suggestions they end up implementing, potentially in the form of ticket upgrades.
YouTube Paid Out $1 Billion in Advertising to Music Industry
YouTube paid out over $1 billion to the music industry just in advertising, according to Business Insider. The company revealed the news earlier today.
Fueled by music subscription revenue, the music industry is growing again for the first time in more than ten years. Analysts at Macquarie predicted that global recorded music revenues will increase twofold during the next decade.
YouTube said that its $1 billion advertisement payout proves that “multiple experiences and models are succeeding alongside each other.”
Others in the music industry do not agree that YouTube is helping the industry thrive. Major labels and other big music companies have been criticizing YouTube for months for not paying enough in royalties.
In March, the head of the RIAA, Cary Sherman wrote, “In 2015, fans listened to hundreds of billions of audio and video music streams through on-demand ad-supported digital services like YouTube, but revenues from such services have been meager – far less than other kinds of music services. And the problem is getting worse. Check out the alarming disparity between the growth in the number of ad-supported streams compared to the growth in revenues generated from those streams.”
Many label executives believe that people use YouTube instead of services like Spotify and Apple Music, which pay higher rates. But YouTube claims it’s a different kind of service.
Streaming music was the number-one revenue source for the business in 2016, so YouTube executives and others are looking at which business model they should follow. YouTube hired experienced music executive Lyor Cohen in September in order to help ease relationships with the greater music industry.
YouTube recently suggested that the streaming industry needs both advertising and subscription components. And $1 billion is a lot of money. Spotify paid out $1.8 billion in 2015.
A YouTube spokesperson explained, “In the future, the music business has an opportunity to look a lot like television, where subscriptions and advertising contribute roughly equal amounts of revenue, bolstered by digital and physical sales.”