Like Twitter, music streaming services are killing it with huge mobile audiences – tens of millions of users and rising. But they are struggling to turn growing audiences into growing business success and a burst of consolidation is likely on the horizon.
Sound smart: None of the big players are profitable: Spotify is about go public; Pandora is taking big money from SiriusXM to compete; and Soundcloud just laid off 40 percent of its staff to stay afloat.
Bottom line: The audience is there, but the cash isn't flowing ... yet. A big part of that stems from economics behind the digital economy (too many players in a crowded field) and music ownership and distribution rights — an issue that has been at the heart of the streaming mess since the beginning.
Deeper: The streaming economy is built around the premise that one day these giants will grow big enough to be able to force music labels to meet their terms, instead of the other way around. Apple Music is reportedly looking to give music labels less of a cut, but nothing has been negotiated yet. Spotify celebrated a mere 3-cent royalties reduction deal with Universal from 55% to 52% earlier this year.
