Can music guys make music subscription work?

Producer Jimmy Iovine thinks that, unlike tech companies, music companies will be able to persuade people to subscribe to a music service - and he’s about to test his theory

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Iovine also talked about his efforts to convince Steve Jobs to launch a music subscription service. While he said Jobs, eventually, was “feeling it,” he also felt that the licensing fees the record labels would demand were too high. Iovine thinks that Beats, using its music know-how, can build a service that draws in enough users to justify paying the licensing fees that will be required.

Can music people make music subscription finally work? I’m skeptical. There are too many free options for streaming music (e.g., Pandora, Spotify), so long as you’re willing to put up with the occasional ad (still much less than traditional radio, and with no annoying DJ chatter). If you really want to hear something specific that you don’t already own, you can buy that song or album without paying a recurring monthly fee. 

Can Beats really add enough value to make subscription appealing enough? It would have to be some pretty good (and high volume) of curation. Sure Iovine et al. can identify new talent, but can they do it well enough and frequently enough to get me to commit to paying $10 (or more) per month to hear their latest finds? It’s hard to picture.

I think the best prospect for music subscription to work would be the collapse of the Internet radio, which isn’t an impossible thought given the high Internet royalties that Pandora and other streamers currently have to pay. If Internet radio essentially went away, that might drive people to subscription. On the other hand, if high Internet royalties kill off free music streaming, that would presumably make the cost of direct licensing of music (which would be required for subscription services) even higher, driving up subscription costs and making it even harder for subscription to work.

But, who knows? Iovine is a sharp guy and a proven success in several different endeavors. Maybe he’ll prove that he was right and Steve Jobs was wrong about music subscription. For me though, even though he’s dead, I think I’ll still side with Jobs on this one.

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