Music services struggle as major labels demand double what buyers are willing to pay

By on March 19, 2014, 5:00 PM
spotify, rdio, subscription, music streaming, major labels, international federation for the phonographic industry

The recording industry has been on a steady decline over the past decade or more as digital downloads pushed CDs aside. It appears that the once $40 billion a year industry is now going through another major transition from downloads to streaming.

While it may seem as though music has gotten cheaper over the years, and to some extent it has, a report from Re/code suggests the average price tag on most current popular streaming options is just too high for the industry to see large numbers of adoption.

Based on data from the International Federation for the Phonographic Industry, at the peak of the recording industry market, music buyers were spending on average $64 a year. That number dropped since the late 90's to around $48 a year currently, according to the world's largest music retailer, Apple. As the report points out, it is clear to see that, at best, the average music consumer is willing to drop between roughly $45 and $65 a year.

Consumers are arguably getting more for their money with modern streaming services compared to the past, but most of the popular on-demand music subscription plans cost around $120 a year. While there are some special cases where the total is lower through family plans, this is around double what would appear to be the amount the average music buyer is willing to spend, according to Re/code's analysis.

The major music labels are difficult to deal with for streaming services that want to offer the lowest price possible. The industry has mandated a minimum monthly fee in which services much charge in order to have access to what ends up being the most popular artists. It has been said that, either consumers will have to start dropping twice their average yearly spend, or the music industry is going to have to allow monthly subscriptions rates to come down fairly dramatically in order for streaming to latch on at its greatest potential.

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