Facebook debuts streaming-focused ‘music stories,’ with help from Spotify & Apple Music

It’s been a while since the world’s largest social network gave any attention to music, but today it’s making another attempt.
Facebook introduced a new post format today called “music stories” that allows its users to listen to 30-second previews of songs their friends share from Apple Music or Spotify. People who like what they hear will also be able to add the song to their streaming libraries or purchase the track via iTunes.
“We hope by making this experience better, artists will share more, friends will share and engage more, and music will become a better part of the Facebook experience overall,” Facebook director of product Michael Cerda said in a blog post. The feature is currently limited to Facebook’s iPhone app.
These new music stories are limited in their scope. The songs will be streamed via the service from which they were shared. And at least for now, all interactions will be limited to those two services. This means someone who likes a song shared from Spotify is screwed if they prefer Apple Music and vice versa.
There are also many other streaming services — Deezer, Rdio, Pandora, Slacker, 8Tracks, Tidal, and probably a dozen others I can’t remember — that aren’t supported with this feature. I suspect that won’t bother most Facebook users, the majority of whom probably use Spotify or Apple Music, but it’s still likely to irk some.
The feature is reminiscent of Twitter’s #Music service, which tapped Rdio and Spotify to allow its users to listen to music shared by their networks. That service wasn’t long for this world: Twitter reportedly considered pulling the plug on it six months after its debut, and it was shut down in April 2014.
Facebook’s music stories are probably longer for this world. The company hasn’t yet built an entire service around streaming music — it’s just made it easier for people to listen to the songs their friends already share. That’s a far lower commitment to the category than a standalone service like #Music was.
That said, it will be interesting to see how this affects streaming music services that aren’t supported by the new format. How many music stories will Rdio or Tidal users have to see before they sign up for Apple Music? How many songs will Deezer subscribers listen to before jumping ship to Spotify?
If music really is as social as Facebook imagines — and the company is often right about what people are sharing to its network, thanks to the vast amount of data it collects and parses every day — this could make a big difference to people whose friends and family all use a different streaming music service.
Or perhaps it will lumber about without making much difference to most people. If #Music taught us anything, it’s that even though music is a social experience, it’s not necessarily a social networking experience. There’s a difference — Facebook’s about to find out exactly how much that matters.

Apple reportedly wants to get rid of free on-demand music

Love free stuff? Then you won’t like Apple’s new music subscription service, which the company is expected to launch later this year. Apple is planning to launch the service without a free tier, and instead plans to charge every user after a limited free trial, according to a Recode report.

That’s similar to Beats Music, which Apple got its hands on as part of the $3 billion Beats acquisition last year. But it’s very different from Spotify, the current industry leader. Spotify has 15 million paying users worldwide, and at least 45 million additional users tune into the service’s free, ad-supported tier.

Spotify’s ad-supported tier has been so successful that competing services have started to embrace free music as well. Rdio, for example, long resisted giving music away for free, but the company now has a free radio service that aims to pull in users, with the goal of eventually converting them into paying subscribers.

However, Recode reports that label executives are increasingly growing frustrated with those free tiers, with some blaming them for the decline in music downloads. Apple wants to counter that trend with a $8 service, which is expected to be closely tied into iTunes and iOS.

Some in the industry would also question that notion, and instead argue that there are simply different price points for different types of users. Rhapsody has been trying to win over budget-conscious users with a $5 radio tier that is essentially like a Pandora without ands, and Deezer has started to charge audiophiles as much as $15 per month for lossless FLAC streams.

Deezer North America CEO Tyler Goldman told me at CES this year that he doesn’t believe in just one package and price for every type of user. Tyler Goldman “That silver bullet strategy doesn’t work,” he said.

The music industry’s broken business could change in 2015

The music business has been screwed up for a hopelessly long time, but change is afoot: Congress, courts and the Justice Department are all poised in coming months to shake up how companies and consumers pay for music. The big question, though, is whether this flurry of activity will produce a rational royalty system — or just make the existing rathole even deeper.

Here’s what to watch for in a year that could change the rules of the game for performers, [company]Pandora[/company] and everyone else with a stake in music.

Flurry of laws, hearings

The last month has seen the return of two proposed bills in Congress. One is the Local Radio Freedom Act, which would ensure that traditional AM/FM stations don’t have to start paying performance royalties on top of the songwriter fees they currently pay. The other is called the Songwriter Equity Act, which would tweak the way so-called “rate courts” calculate how much people who write songs should get paid.

Both bills have appeared before in one guise or another, but never passed. This time, the outcome will be determined in part by whether Congress takes up the issues at stake on its own, or as part of a larger royalty reform effort.

Meanwhile, industry attention is turning to the Justice Department, which is holding a hearing on March 10 over so-called consent decrees. These are antitrust orders that apply to ASCAP and BMI, two giant outfits that license songs on behalf of music publishers, and require them to license song rights at a fixed price to all comers. The antitrust orders have been a boon to everyone from cover bands to bars to radio stations because they provide an easy, efficient way to clear copyrights. But music publishers say they are getting short-changed and want the orders, which date from the 1940’s, to be changed or abolished outright.

Finally, some high stakes court cases increase the chances this will be a year of reckoning for the music industry.

Digital on trial

The most contentious of these cases involve an aggressive series of class action lawsuits, brought by record labels and former members of the band The Turtles. In courts from California to New York to Florida, the labels are claiming that Pandora, Sirius-XM and other digital music services have failed to pay for performances that date from prior to 1972.

The legal theory appears far-fetched, but it’s gained traction before some judges. If the cases go any further, they will have huge financial and legal implications not just for Pandora, but for any other service that plays old music on the internet. (The labels also pushed the issue last year through a proposed law, The Respect Act; look for that bill to return if the labels strike out in court).

And, if all that’s not enough to keep track of, there’s also a court clash between Pandora and BMI. This one is about royalty rates, but also about whether publishers who use BMI to license their songs can pull the digital portion of their catalogues or if they must instead be, in the words of one judge, “all in or all out.”

A ruling in favor of BMI could cripple digital radio services, but that appears unlikely given that ASCAP lost a similar case last year.

What the fight’s really all about

All of these disputes are bitter and complicated, but the source of them can be summed up in a sentence: the music royalty pie has shrunk significantly, and what’s left of it is being distributed unequally. As an RIAA report in 2013 revealed, digital sales may be growing, but not fast enough to offset the long-term loss of CD sales. Professor Peter Tschmuck, as part of an analysis of the U.S. music industry, put the RIAA’s data into a chart last year:

Peter Tschmuck chart of RIAA data

These larger forces are why many of the measures now floating around — the songwriter law, the consent decrees, the court cases — won’t do much to change the game. Such piecemeal fixes also do little to acknowledge the current royalty system is broken because it’s built on assumptions of the analog era.

The proper way to approach the problem is instead to require the music industry to recalibrate the entire copyright collection process from the ground up and, especially, to fix two major imbalances in how money is collected and paid. The first imbalance involves a seemingly irrational distinction in how the law treats AM/FM stations and digital radio.

Pandora, for instance, is a favorite punching bag of the industry, but the company also spends the bulk of its revenue paying performers — even as traditional radio stations pay nothing at all. The reason for this, Washington insiders suggest, is that members of Congress are eager to make nice with local stations on which they rely heavily during election campaigns. This is why they are happy to let them pay nothing to performers, while at the same time throwing the likes of Pandora and Sirius-XM under the bus when it comes to royalty rates. But for musicians and for consumers, there’s really no reason why digital and AM/FM should be treated so differently.

The other big imbalance when it comes to royalties is between songwriters and performers. Many people will be surprised to know that when performers do get paid, which is the case when a song is played on digital radio, the rates can be up to ten times higher than what the songwriters (and their publishers) get.

The reason for the imbalance in this case, though, is the consent decrees that set the rates at which publishers get paid. The Justice Department could address this by lifting the decrees, and allowing publishers through ASCAP and BMI to charge what they like. But this could lead songwriter rates to go through the roof, and fatally wound digital radio services once and for all (recall Pandora is already on the ropes). It would also create new licensing headaches for restaurants, bars and other places that play music.

That’s why any solution that looks to pay songwriters more will also have to consider when it is appropriate to pay record labels, which represent the performers, less.

As for the dispute over pre-1972 recordings, the court cases (and the now-dormant Respect Act) appear to be no more than a cash grab through copyright expansion. Judges and law-makers should blanche at the idea of handing out windfalls, at the expense of consumers, for music that is already 50 years old. Such a gift would be a boondoggle akin to ethanol subsidies or the Bridge to Nowhere.

Change is coming.. but for better or worse?

All of this comes at a time when musicians are having a harder time than ever. The record industry that once nurtured them has shrunk dramatically, CD sales are drying up rapidly, and internet royalties are not making up the difference. But on the bright side, the internet has introduced new efficiencies that make it easier to track song sales and distribute payments (which helps explain ASCAP’s surprising $1 billion year.)

A solution from courts or Congress is in order. The danger, though, is that a partial solution will protect parochial interests such as FM stations or labels that own 1960’s recordings without creating a sustainable system for royalties in the digital age. There’s also a risk that changes to the law will simply scapegoat companies like Pandora and Spotify, which represent the future of music, or even kill them off altogether.

In any event, watch closely. This is the year that a lot of long-time log-jams in the music industry appear set to move.

Robots vs. pop stars: Who is better at curating your music?

The Apple rumor mill is getting its groove on these days as new details appear about a revamped streaming service slated to be launched in the coming months. 9to5Mac reported last week that Apple is working on a new music service that uses some of Beats Music’s technology, but is going to be deeply integrated into iTunes and iOS.

Business Insider followed up with another report Monday, suggesting that the project will feature curated streams from well-known musicians. [company]Apple[/company] also recently hired BBC Radio DJ Zane Lowe, and is looking for music journalists who could be writing copy for the new service. All of this suggests that the company is looking to keep Beats Music’s focus on human curation and build a more radio-like experience, possibly with help from many music celebrities.

The question is: Do music fans really want this? Do musicians make for good DJs, and do well-known names help to unlock the 30-plus million song catalog of a music streaming service?

Or would algorithms simply do a better job?

Musicologists and trillions of data points

The debate over human versus automated curation is almost as old as online music itself. [company]Pandora[/company] was one of the first services to embrace the idea of human curation in a personalized streaming environment when it built its Music Genome Project back in 1999.

The idea at the time was to not simply play songs because algorithms deemed them as a logical choice based on the behavior of other users, but actually figure out how each song sounds, which instruments it features and which tempo it uses. Pandora hired dozens of curators to catalog more than one million songs based on up to 450 musical criteria, and its website describes these curators like this:

[blockquote person=”” attribution=””]“The typical music analyst working on the Music Genome Project has a four-year degree in music theory, composition or performance, has passed through a selective screening process and has completed intensive training in the Music Genome’s rigorous and precise methodology. To qualify for the work, analysts must have a firm grounding in music theory, including familiarity with a wide range of styles and sounds.”[/blockquote]

Today, Pandora still relies on the Music Genome Project, but it is also using algorithms and data to make its playlists work.

Others took a different approach and ditched the human expert altogether, instead relying on the wisdom of the crowds and big data analysis to generate that perfect playlist. [company]The Echo Nest[/company], for example, which was acquired by Spotify a year ago, is using close to 1.2 trillion data points on more than 36 million songs to automatically generate playlists for Spotify and other services. The Echo Nest co-founder Brian Whitman will be at our Structure Data conference in New York next month to tell us how he wants to use all that data to reinvent the music industry.

Park rangers, not gatekeepers

Lately, the pendulum has swung back to human curation, with Beats putting a heavy emphasis on its expert curators, and Slacker building a radio-like experience around YouTube stars and other personalities. The reports about Apple’s plans now seem to suggest that the company wants to go further down that road, embracing stars to become both brand ambassadors and actual curators of your music.

However, not everyone is convinced that this is a good idea. Online music industry veteran Tim Quirk, who used to head music programming for pioneering streaming service Rhapsody and then did the same thing for Google Play Music, took to Twitter today to object to the idea that musicians make good curators. Here are some highlights of his arguments:

[pullquote person=”” attribution=”” id=”917022″]Will the future of music look like Sirius XM or like Netflix?[/pullquote]

Of course, many will argue that there is value to expertise, and point to great radio DJs, so of which even are musicians. That’s why I asked Quirk what it takes to bring this kind of personality-driven curation to streaming services. His answer:

“Subtract the personalities. Seriously. They need curation that doesn’t brag about itself.”

In the end, this may all come down to the question what music services want to be, and how they plan to appeal to millions of consumers who have thus far shied away from music subscriptions. Do they want to be more like traditional radio and guide listeners through a catalog of millions of songs? Or do they want to be the celestial jukebox that brings millions of songs to your fingertips, ready for you to go on your own adventure?

In other words: Will the future of music look like Sirius XM or like Netflix? The first company to find a compelling answer to that question may be able to really take music subscriptions mainstream — with or without celebrity DJs.

Grammys are latest forum for fight over music payments

Last night’s Grammy Awards served up the usual hoopla and back-patting. But a policy plea from singer Jennifer Hudson also underscored how 2015 is likely to be the year when a long-brewing fight comes to a head over how — and how much — musicians should be paid.

At the show, Hudson announced the launch of an artist group called the”Grammy Creators Alliance” that will advise the government on royalty issues, while One Republic singer Ryan Tedder told the audience “music activism is coming at exactly the right time. From the Turtles to Taylor Swift, longtime established and new generations are speaking out.”

While the speeches were short on specifics, a website for the group echoes recent rhetoric from the recording industry, and appears intended to pressure Congress into passing bills like last year’s proposed “Respect Act,” which called for awarding a windfall to older musicians.

The Grammys plea also comes after the Copyright Office last week published a 245-page report that suggests dramatic changes to the music royalty system in the U.S. These could include removing consent decrees that set a cap on how much radio stations, streaming services and cover bands must pay songwriters to play their works.

The combination of industry lobbying and Grammy-style star power means the music industry is likely to get at least some of what it wants. But many of the proposed measures could also means higher prices for consumers, and new uncertainty for popular digital music services like Pandora and Spotify.

Currently, the digital services pay a far higher percentage of their revenue for royalties than do traditional AM/FM outlets, and are struggling to make money. Nonetheless, the services are regularly vilified by the music industry, which is calling on them to pay even more.

Meanwhile, the debate over what digital radio services should pay is also before the courts, in major cases concerning songwriter royalty rates. Members of the band The Turtles are leading class action cases that demand new money for old recordings.

Underlying all of the disputes is the ongoing economic disruption confronting the music industry over lost CD sales. Meanwhile, all sides appear in favor of simplifying the current mishmash of royalty regulations that draw major distinctions between digital and non-digital services.

Sony’s Spotify partnership shows me-too services don’t pay

Are you a PlayStation user? The Sony’s got a music service for you. Again. Except, this time, it’s not its own: Sony announced a new partnership with Spotify Wednesday that brings Spotify’s music service to PlayStation users in 41 markets around the world. At the same time, Sony is shuttering its Music Unlimited service, which had been trying to compete with Spotify and others in 19 countries.

This isn’t the first time Sony failed at music: The company was amongst the first to try its hand at music subscriptions with Pressplay, a music service jointly launched with Universal Music in 2001, but sold to a third party in 2003. The company went on to launch a music download store dubbed Connect in 2004, which was supposed to bring digital music downloads to the company’s portable music players. Those didn’t sell, so Sony closed Connect in 2008.

Those two failures didn’t stop Sony from trying again in 2010, this time with a service curiously called Qriosity that was soon after rebranded as Sony Music Unlimited. This service, which will now close on March 29, was closely tied to Sony’s game console, with a Sony representative telling me a year ago that PS4 users made up for close to 40 percent of all streams.

But in the end, Sony Music Unlimited was just one more service to offer what all of its competitors already have: The same 30-plus million tracks from all the major and most indie labels, delivered at the same price, with the same all-you-can-eat value proposition.

The only thing that differentiated Sony from the rest of the pack was its access to PlayStation users. As a platform gatekeeper, it could make sure that no one else was competing with it. Or so it thought. But that’s not how the world works anymore.

Users want to access their services across multiple platforms. For music, mobile really is first. Connected speakers are quickly gaining steam as well, and automotive integration could be a major factor in the future.

But owning one of those device platforms and building a me-too service that just does what popular competitors offer elsewhere isn’t enough. Sony isn’t the only company to realize this. Samsung shuttered its paid music service earlier this year, and lots of other hardware vendors, including Nokia and Blackberry, have shut down their music services over the past few years as well.

One of the last ones standing is Microsoft with Xbox Music. But Satya Nadella’s cost-cutting course already put a halt to the company’s ambitious Xbox video production plans, and I wouldn’t be too surprised if we see the company shut down its music service soon as well.

Spotify’s bet for short-term growth pays off

Spotify now has 60 million active users, and 15 million of those are actually paying users, according to a post on Spotify’s blog. The announcement comes just two months after the company revealed it had 12.5 million paying users, which means it grew around 17 percent in just two months.

That’s impressive, but also no accident: [company]Spotify[/company] launched a deeply subsidized promotion in early December, offering consumers three months of music for just $1. That price obviously helped to convince a lot of people to sign up — but as I noted back then, it was also designed to boost Spotify’s numbers in another way.

Spotify usually lets consumers try its paid service for free for a month. The downside of that approach is that the company can’t account for trial users as paying customers until the second month, when credit cards actually get charged. And had the company decided to give its users three free months, then it wouldn’t have been able to account for them until March at the earliest.

The promotion it unveiled in December on the other hand had users paying on day one, even if it was just one dollar. That means it was able to grow its paid user base a lot in a very short time frame — which matters for a company that tries to raise more money, or even go public.

Bop.fm launches its first mobile app on iOS

Online music startup Bop.fm released an app for iOS Tuesday that represents its first major foray into the world of mobile music. The app offers access to music on Spotify, SoundCloud and YouTube, and allows users to mix music from any of these services in playlists or personalized radio streams, as well as to discover new music through social feeds.

Bop.fm started out with its website that combined songs from a variety of music services, allowing Spotify users to compile playlists for their Beats Music-using friends, which is why Bop.fm has also been called the Switzerland of online music.

The startup then expanded to also offer music through widgets on Facebook and third-party websites, something that has been used by artists and labels to share music with their fans across music services. However, something was still missing, said Bop.fm co-founder Shehzad Daredia during an interview last week “The product was incomplete without a mobile app.”

Daredia added that he sees Bop.fm’s app as complementary to existing music services and their apps. One reason: Users still have to sign up for a premium Spotify account to take advantage of Spotify’s music through the app. “There are no free tiers for on-demand mobile playback,” Daredia said.

Check out a demo video of the app below:

[youtube=http://www.youtube.com/watch?v=57Ojw9ZMr0Q]

Spotify’s new promotion: three months of music for just a buck

Still on the fence about music subscription services? Spotify would like to change your mind with some deep discounts: Three months of Spotify’s ad-free premium tier will cost new subscribers just $0.99, it announced Friday.

Spotify’s regular premium tier fee is $9.99 per month, but the service usually gives new users a one-month free trial. Under the new plan, this means that by signing up now they can save $19 over the course of their first three months. For Spotify, it means that users are starting to pay from the very first day, which could mean that they are less likely to cancel later on.

But there is also another side to this: Users who sign up for a free trial can’t be counted as paying users until the second month of their premium membership, whereas getting users to pay $1 for 90 days turns them into paying subscribers from day one. That looks better on paper, especially if Spotify was trying to raise more money, or if the company was trying to get itself in shape for an IPO.