To be a music fan in 2014 is, truly, to be spoiled for choice: at no time in human history has music been more available on-demand. If you have a data connection, then you have access to millions of songs on offer through online music streaming services.
A very contentious topic in the music industry, there is much debate and discussion about issues such as royalty rates, long-term sustainability and the overall comfort with the logic of leasing music rather than owning it. Those larger issues aside, this article briefly examines six streaming services: Grooveshark, SoundCloud, 8tracks, Songza, Spotify and MediaZoic. Collectively, these services represent a cross-section of the good, the bad and the ugly in the music streaming universe.
Grooveshark’s service allows users to upload music from their own collection to its online database, thereby permitting other users to stream music for “free” in exchange for exposing their eyeballs to ads. Users can stream individual songs, listen to genre-based stations and create their own playlists. The user interface is average, and the look and feel of the service has changed several times over the years. Because the songs on Grooveshark are uploaded from users’ private collections, there is no necessary guarantee of file quality or sound fidelity.
From its launch in 2006, Grooveshark’s business strategy was to build a massive database of music, attract a large audience (which, according to Grooveshark, peaked at 30 million monthly users), and then obtain the necessary licences to monetize the service.
As one of the earlier online music streaming services, it grew very quickly; in fact, at one point, the ubiquity of the service caused many people to believe that it was either a) legal or b) that its use in the United States of copyrighted content fell under the “safe harbour” provision under §512(c) of the Digital Millennium Copyright Act, which effectively shields online service providers from liability of copyright infringement if they promptly remove infringing content upon receiving notice from the rights owner, and subject to certain other conditions (the Canadian Copyright Act contains similar safe harbour provision, though intermediaries seeking protection are not obligated to take down any allegedly infringing material). Reliance on this provision is one of the main arguments advanced by Grooveshark in defence of the numerous lawsuits brought by labels and publishers. Unfortunately, this argument flies in the face of a reality that was subsequently proven in court: Grooveshark executives actually encouraged company employees to violate copyright laws in order to populate the Grooveshark music database.
Despite reaching a licensing agreement with EMI Music Publishing in 2009 (which was terminated and then sued upon by EMI in 2012 due to non-payment of royalties), Grooveshark and its parent company Escape Media Group have at various times been sued by some combination of the four major record labels. In September of 2014, nine record labels successfully sued Grooveshark in the United States District Court Southern District of New York, with heavy liability expected for co-founders Sam Tarantino and Joshua Greenberg. As such, for many years, Grooveshark has swum in murky waters; it is a safe bet that the Florida-based company will be extinct very, very soon.
SoundCloud offers users the ability to upload, share and listen to entire songs and sound recordings. The listening experience previously was free, and as of 2015 they now offer a paid subscription service, which makes money by charging uploaders for storage space and the ability to make recordings available for download. SoundCloud was initially conceived as a place where creators can upload new remixes, or sounds; this user-generated approach distinguished SoundCloud from other services, however, as it experienced exponential growth - currently maintaining 175 million listeners and 40 million registered users - SoundCloud has become a mainstream content distribution platform.
Despite its accelerated growth (or perhaps in spite of this growth), SoundCloud developed largely without a set monetization model, and only recently began paying royalties. Interestingly, and somewhat contrary to character, record labels and publishers took SoundCloud’s development in good stride. There may be several reasons for this. SoundCloud’s small size and limited resources has meant that it cannot effectively police all content on its servers, which, in turn, has made copyright owners’ rights less meaningful (i.e. there can be no right without a remedy). Also, SoundCloud had a perceived innocence as a place where bedroom hip-hop producers uploaded their new mixes; it was never supposed to become a major distribution platform. However, now that artists like Drake release new music on SoundCloud and can get upwards of a million “likes” in a few days, the industry is paying close attention. It is not surprising, then, that in the summer of 2014 SoundCloud entered into branded partnerships with 40 companies, including Jaguar, Sonos and Red Bull, and also recently signed its first deal with major label Warner Music Group.
How legal is your SoundCloud playlist? It’s legal-ish; well, it’s getting there. Neither SoundCloud nor its users have been successfully sued, and monetization strategies are quickly on the way. As online music services go, that’s a pretty solid track record. So don’t fret: that Bon Jovi and Katy Perry remix you just posted is still safe.
8tracks lets users create and listen to digital mix tapes comprised of songs (minimum of 8) that another user has loaded into its database. The theory behind the 8tracks model is that you – music super fan - are the DJ creating mixes other people will probably want to listen to. It’s like making mixtapes for your friends in 80s and 90s…but with ads. 8tracks offers a $25 six-month subscription package for an ad-free experience. The service has 8 million global listeners, with nearly 1.5 million in Canada alone.
8tracks is an easy-to-use service with a slick user interface. And the best part? It’s completely legal. 8tracks has a compulsory licence to play any music it chooses so long as it operates as a “non-interactive webcaster”, e.g. an online radio station without any listener input. This means that users cannot see all the songs in the playlist, and there are limits on the number of times you can listen to the same artist in a given mix. 8tracks logs every performance, and submits these logs to all of the applicable performance rights organizations, namely SOCAN in Canada and Sound Exchange in the US. So, go ahead and create that Christmas mixtape for your office party, because nothing rings in the holidays like Nat King Cole’s “The Christmas Song” followed by Skrillex.
Songza offers access to streamed music through custom web-based radio stations. The user interface is smooth, playlists are grouped by mood, activity (like “Working” or “Food for Funk”) or genre. Songza playlists are curated by music experts - well-known DJs, Rolling Stone writers and high-profile music aficionados (about 25 in total). This human touch is a key differentiator for Songza, as competitors such as Spotify and Pandora rely on computer algorithms to create playlists. The ability to “set-it-and-forget-it” - and hear exactly the music you like, mixed with new music you didn’t know about, is Songza’s main value proposition.
Songza entered the Canadian market in 2012, and one million of us signed up within the first 70 days of launch (of its approximate 5.5 million current users, about three million are Canadian). The service is ad-driven for the freemium user (display ads only) and offers a $0.99 weekly subscription for an ad-free experience. Songza pays royalties in both Canada and the United States.
Despite never having turned a profit, Songza was bought by Google in July 2014. While Google has said that it will keep the service operating as-is, many industry pundits speculate that Google is building its arms cache for the upcoming “platform wars” against heavily-armed competitors Apple (Beats), Spotify, Pandora, Amazon (Prime Music) and even another arm of Google itself (Google Play All Access). Others suspect a more nefarious motivation: Google wants Songza’s user data (e.g. time of day, location, age, etc.). So, if you’re comfortable with Google knowing more about you than it probably already does, then you’ll enjoy listening to music on Songza.
Launched in 2006, Swedish Spotify boasts a catalogue of over 20 million songs, and offers users the ability create their own playlists or listen to those curated by Spotify’s computers. Spotify began in Europe, moving to the American market in July 2011 (after years of negotiations with the four major record labels), and finally entering the Canadian market in September 2014. Globally, Spotify maintains 30 million unpaid subscribers and 10 million paid subscribers.
Spotify operates on a freemium model with audio and display ads, but offers an ad-free experience with a $9.99/month premium account. Premium users have the ability to cache music on their desktop or device for offline listening (but if you terminate your account, you sing bye-bye to your cached music). The Spotify experience is slick, well-designed, and fully licensed.
Spotify is a major player in the streaming market, and has been lightning rod for controversy since its inception; CEO Daniel Ek has very publicly bemoaned the high cost of music licensing, and the company aggressively and unapologetically pursues advertising and brand partnerships to increase its stock price. With the goal of providing access to the entire history of recorded popular music, Spotify is music industry saviour for some, and harbinger of a bleak future for others; it all depends on who you ask – the tech and Wall Street crowd, or songwriters. Nevertheless, Spotify indeed represents a version of the future of music streaming: a distribution platform where branded music content provides a “free” listening experience.
The preceding services are geared for personal listening in the home or around the office. So what to do if your firm is looking to create its own client-facing, fully customizable radio station? Hughes & Hughes LLP rock radio, anyone? Mediazoic, a Toronto-based custom radio company, offers exactly this opportunity: to carve out your own fully licensed broadcasting space. Radio personality and music guru Alan Cross has his own station, as does gourmet burrito chain Quesada. Many people, including this author, expect that a significant part of the future of music delivery will involve a heavy business-to business emphasis. Greg Nisbet, Mediazoic’s founder and CEO, refers to this as “branded entertainment”. “It’s coming soon” Greg opines, “Paid subscription services will find that it’s really hard to get subscribers, so they’re going to move towards more branded entertainment.” Greg may be on point here: at present, companies can only attach their brand to music through traditional media buys like the ones peddled by Spotify or Songza. However, technology is blurring the lines between content creation and distribution (consider that Netflix went from licensing TV shows to producing them), and the future of distribution platforms is brand-curation.
All of these services offer different value propositions and listening experiences. They have all embraced some vision of the freemium business model, and they essentially have equal access to the same catalogues of music (with some exceptions). So, give them all a try; you may end up sticking with one, or, if you’re like me, use them all in different ways at different times. In 2014, with an over-abundance of music available 24/7, the only question we really need to answer is how we want to pay for music – with our eyeballs and eardrums, or with our wallets?
About the Author
Andreas Kalogiannides practises in the areas of intellectual property, corporate, technology, and immigration law, with a focus on creative professionals. Kalolaw.ca