Category: Digital Media

Hooray! Hulu goes Ad Free

The online film/tv streaming service will offer customers an ad free option for only about $4 more than their standard package. The new advertisement free package will allow Hulu to compete with other streaming services offering digital distribution of content. Although Hulu’s ad free package will be slightly more expensive than Netflix it will offer a more popular selection of film/tv classics. In abandoning the advertisements model Hulu is betting big on it’s customer base. Traditionally advertisements cover the cost of content creation and content distribution. Thus far in the evolution of streaming services we have focused completely on the cost of content creation but ignoring the even bigger cost of content distribution. As the world modernizes in even the most rural of communities server space is quickly becoming an expensive commodity.

To understand the free distribution model we must start at the beginning of streaming. When Youtube emerged as a content platform it temporarily eliminated the market for paid content because the distribution was free to the creator and the content was free to the consumer. (Note: for years the entertainment industry has survived on the costs associated with distributing content even where the content distributed was created for free, at little to no costs or at exorbitant costs). There is a much greater incentive to charge for something that had an initial cost. Let’s assume Youtube was created with a subscription service model of $5.99 a month. As a subscriber paying $5.99 for a service you are economically incentivized to at least recoup your monthly fee by charging your subscribers or charging for advertisements. Ahh advertisements. Ads play a unique roll in digital distribution because they advance the costs of distribution to the consumer. (No one minds watching a 30 sec ad for a 5 minute video but everyone minds watching a 5 minute ad for a 30 sec clip of cats playing chop-sticks with chop-sticks) The later is unlikely in that Ads aren’t going anywhere but I think we will see more subscription/ad combinations especially when there is specialized content involved.

ASCAP Licenses Include Music Streaming Rights

The Second Circuit US Court of Appeals confirmed that ASCAP’s consent decree does not permit music publishers to partially withdraw from ASCAP’s licensing agreements granting ASCAP the rights to collect royalties including streaming royalties on behalf of music publishers. The Second Circuit also affirmed the district court’s determination that the proper rate for Pandora’s license was 1.85 percent.

Apple is ready to compete with Tidal

Apple’s new streaming service Apple Music will offer two paid subscription options similar to Tidal, one for $9.99 and the other premium option allowing up to six family members offered for $14.99. The major difference outside of the sharing option between the two services is the creators of the content, while Tidal has locked down female heavyweights Rihanna, Beyonce and Nicki Minaj not to mention rappers Jay Z and J Cole Apple’s service is set to lock in Drake and Kanye West.

SoundCloud Inks Deal with Merlin

In awesome Indie news SoundCloud has inked a deal with Indie label organization Merlin. Merlin represents over 20,000 Indie record labels who will now have the opportunity to monetize their uploads with advertisements. This is a huge step towards SoundCloud’s ultimate goal of legitimizing all user content including podcasts, DJ mixes and remixes.

The Music Industry Dismantles Groveshark

Popular music streaming service Groveshark has finally closed it’s doors after eight years and a lengthy four year battle with the music industry. In an open letter the digital music streaming service says “We started out nearly ten years ago with the goal of helping fans share and discover music. But despite best of intentions, we made very serious mistakes.” In the letter Groveshark owned by Escape Media Group, LLC admits they failed to secure the appropriate music licenses, “We failed to secure licenses from rights holders for the vast amount of music on the service. That was wrong. We apologize. Without reservation.”

The letter continues “As part of a settlement agreement with the major record companies, we have agreed to cease operations immediately, wipe clean all the data on our servers and hand over ownership of this website, our mobile apps and intellectual property, including our patents and copyrights.” The settlement requires Groveshark to also pay nearly $50M in damages to record companies. The controversial streaming service faced over $736M in damages at trial because throughout it’s eight years of service and 35 million users Groveshark knowingly infringed over 4500 copyrighted songs. The settlement represents a strong victory for record companies in the never ending battle against infringing content.

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Jay Z makes good on his Aspiro purchase with Tidal

Months ago it was rumored that Jay Z was getting in the streaming business. He purchased UK’s Aspiro for $56M a company with an already established streaming platform. Today the purchase came full circle with Roc Nation’s launch of Tidal. In an impressive marketing campaign the digital streaming app made an unprecedented entrance into the streaming marketplace. The effectiveness of the marketing campaign alone will for sure garner share from already established streaming providers like Spotify and Pandora. (I Currently use neither but Tidal is interesting . . .).

Currently there is no word if the major artists who participated in the marketing campaign will exclusively have there music on Tidal’s streaming platform (Update: The artists will offer exclusive music through Tidal). I think the marketing campaign leaves a lot left to be desired for the true functionality of the app and the value to independent artists. In an a brief interview with Billboard Jay Z stresses that music is essential to the listener and that today’s compensation model for artists is broken. Tidal hopes to fix that massive problem for artists at a more expensive cost to the consumer ($19.99 per month for high-def audio, or $9.99 for a standard-definition tier). Tidal justifies it’s service model on two aspects the artists are guaranteed a higher percentage of sales and the consumer is guaranteed a higher quality sound.

Tidal launched with sixteen artist stakeholders: Shawn Carter himself, Beyonce, Rihanna, Kanye West, Jack White, Arcade Fire, Drake, Usher, Nicki Minaj, Coldplay, Alicia Keys, Calvin Harris, Daft Punk, deadmau5, Jason Aldean, J. Cole and Madonna. Each artists stakeholder was offered a 3 percent share in the company in exchange for exclusive music. The artists’ total equity in the company comes to just under a majority stake, at around 48 percent.