Introduction

            Throughout the past fifteen years, the shifts in technology that have consumed our society have been dramatic, changing the way we conduct every day simple tasks and have altered business models in all different sectors of industry.  Although this can easily be attributed to modification in transportation (Uber), or hotel accommodations (Airbnb), this technological shift and advancement is very evident in the entertainment and music industries as well.

Over the past fifteen years, the music industry, and label conglomerates in particular, has dramatically shifted from a business model focused and reliant on physical album sales to a full service firm offering record production and distribution (that is mostly digital) and other ancillary services of the music industry, such as touring, brand partnerships, and merchandise.  With a reported loss of over 60 percent of revenue over the past fifteen years annually, it has been very clear to these huge, multi-national conglomerates that changes are needed in order to survive in this ever-altering industry.

The three major record labels, Sony Music Entertainment, Warner Music Group, and Universal Music Group, to be discussed in further detail, have taken years to catch up to the evolving technology and consumer demand of our current world, but are working to monetize and turn a strong profit on the world’s biggest artists and names in music once again. Although the days of selling just physical album sales are now over, the music industry is far from dying.

 

History

Universal Music Group, also known by many as UMG, is one of the current global leaders in music.  With over a 30% market share, UMG is considered to be the leader in the industry with a majority share in the global music market.  With this leadership and majority comes with responsibility, as many other companies in the industry, like other label conglomerates, indie labels, management companies, and live ticketing companies look towards the labels and their sales revenues as economic indicators, using them as a clear way of determining the health and vitality of the global music industry. 

The current music industry as we know it, with the three key players – UMG, Warner Music Group and Sony Music Entertainment, was born and created in 2011 with the acquisition and consolidation of EMI and Universal Music Group.

UMG has the largest market share, with a 36.2% share in 2015, followed by Sony with a 28.3% share, and lastly Warner with a 23.1% share.  Independent labels, in 2015, had about a 12% share in the global music industry as well.

2011 was a pivotal time for the music industry, as many lasting changes occurred, shifting the climate of music to today’s current state.  In January 2011, Lucian Grainge was appointed to CEO and then quickly chairman of UMG.  In November of that year, it was announced that EMI, a then big player in the industry would be splitting and merging, selling their recording business assets to UMG for $1.9 billion, and selling their music publishing to Sony for $2.2 billion.

The merger, which quickly changed the landscape of the music industry, was approved by the European Commission and the Federal Trade Commission in Europe and the US, respectively.  This merger changed the music industry landscape overnight, as UMG quickly became the world leader in recorded music and dominated the industry setting.

However, during this time period, the landscape of music purchasing was also changing, with the introduction of digital sales and iTunes, and soon after streaming. iTunes was revealed in 2001 by Steve Jobs at the 2001 MacWorld Expo, and quickly gained traction throughout the world.

In their first press release published in 2001 releasing iTunes 1.0, Apple stated, “iTunes is miles ahead of every other jukebox application, and we hope its dramatically simpler user interface will bring even more people into the digital music revolution.”  As this all became true over the next ten years, it is almost impossible to believe that the instigators of iTunes believed that it would transform the entire music as it eventually did.

It is estimated that iTunes sold over one million songs their first week, with only 200,000 songs available for purchase and download.  By working with the major labels themselves to make sure that their catalogues were available to be purchased, iTunes quickly became a massive music seller.  By 2007, with the release of the first iPhone, Apple became the largest technology company in the world, owning all aspects of our technology-filled lives from the hardware to the content we were consuming on our devices.  And, by the end of the 2000s, iTunes accounted for 26.7% of US sellers, serving as the number one seller of music in the US, either physical or digital.

With the iTunes revenue models, labels quickly began to work with Apple to ensure that their artist and their firms would be receiving adequate compensation, as they realized that the current trends of consumers would quickly begin to shift from physical album sales to singles sold online and downloaded digitally, a la iTunes.

However, by Spring 2011, just as UMG and EMI announced the acquisition, Spotify, a Swedish startup announce that they had just reached over one million subscribers globally and quickly launched in the United States by Summer 2011.  Over the next few years, Spotify and other streaming services would quickly change the entire landscape of the music industry, forcing the major label conglomerates, artists, and other key players to make key adjustments in order to survive in this changing market.

 

Current State of Affairs

            Although many people, especially consumers, today, believe that the music industry is dying and label conglomerates are no longer relevant or prominent in the world, quite the opposite was just recognized, as a new study revealed that the music industry is currently thriving. Even though streaming has easily passed physical album sales as the top way that consumers listen to their music, over the past few years, major conglomerates like UMG have developed new revenue models in order to sustain their businesses.

On November 10, 2016, Universal Music Group revealed their quarterly earnings for Q3 of 2016 and many
people were shocked.  In the first nine months of 2016, UMG reported earnings of over 3.6 billion euros.  This was a 3.8% growth compared to last year’s numbers.  UMG is currently more profitable than Spotify ever has been and is currently on track to have their best year since they were acquired by Vivendi over ten years ago.

Music streaming, in its current state, is expected to bring in close to $6 billion in revenue this year, and is expected to have an annual projected growth rate of 14.3%. (Statistica) With this massive growth in streaming, revenues for the major labels, like UMG are expected to rise in the streaming category as well, with revenue of over $1 billion for UMG alone already reported for 2016.

Streaming is expected to only grow immensely in popularity, as there is projected to be over 1.2 billion users of streaming services by 2021 with a steady increase from now until then.

Diversity of Services

One of the ways in which labels have begun to combat the changing tides of the music industry is to seek out and obtain alternative revenue sources for their artists.  In order to combat the lack of revenue that came from the change to streaming and digital downloads, labels like UMG had to look for alternative ways to make money.  So, they began to sign their new artists to a new type of deal called a “360 deal.”

The deals demand a portion of the artist’s income from record sales, streaming, touring, merchandise, publishing, brand partnerships, and any other type of revenue you might think an artist can receive.  Deals are estimated to range from handing over 5-50% of revenue to the label and can vary on the types of services and revenue streams included depending on the size and career strength of an artist.

Labels, like UMG, have begun to use this model, as they believe that they are investing in the careers of these artists and deserve to be compensated as such.  Because the lack of revenue coming from album sales has hindered their profits, many label heads believe that 360 models will allow them to remain profitable in this ever changing industry and support the artists that they have worked to develop and chosen to put their resources behind.

Artist Perspective

            Today, in 2016, many artists no longer believe that a major label conglomerate is necessary for success and profitability in the music industry.  Just a few days ago, the 2017 Grammy nominations were released.  Many believed that 2017 would serve as the Grammys that changed the music industry, as the Recording Academy was believed to focus on highlighting artists who were not signed under a major label and changed the landscape of the music industry based on their individual decisions.

Although many of the artists (including all of the Artist of the Year nominees) are still representing major labels, one of the most notable non-major label artists nominated is Chance the Rapper.

Chance the Rapper received seven Grammy nominations this year, only following major label artists Drake, Beyoncé, Rihanna, and Kanye West.  Chance received more nominations that Justin Bieber, Sia and David Bowie, all major label artists as well.

Chance, who is not signed to a major label, is known for releasing his music for free and only on streaming sites. His latest album, Coloring Book, was only released on streaming and is the first digital-only album to be nominated for a Grammy.  The album charted on the Billboard Top 200 with over 57 million streams (equivalent to 38,000 units) and his latest single reached the Top 40 charts as well. 

He explains his mentality on not signing to a major label and believes that he can better his career in a way that is in a superior way than any one of the major labels could. “I’m just trying to be an example for all the young artists that are becoming artists everyday and working on their craft and trying to help them avoid the pitfalls of the upper management in music and the non music side of music.  When it’s in your hands you’re just self motivated and have all the tools that are there. I just want people to avoid the convo.”

Although Chance the Rapper is not ever artist, and certainly not every well-known artist currently touring on the charts, he is a strong example of a type of business model that clearly works and is defying the traditional label/artist relationship that major labels like UMG have worked for years to grow and develop.

Conclusion

            UMG, and the record industry as a whole, is at a current crossroads.  From what originally began as conglomerates of music labels working to record and publish music, it seems as if labels are vying to take the control away from artists and other industry entities, like management and agencies, in order to still serve as the gatekeepers of the industry.  From a revenue perspective, major labels like UMG are still vital for many musicians to “make it” in the music industry in order to reach the massive audiences needed to tour or chart.

However, with artists, like Chance the Rapper succeeding without a label and making all of the business decisions with an a la carte team pieced together himself being nominated for multiple Grammys, the current landscape may change even more.  As Chance the Rapper gains notoriety, up and coming, and more developed artists, might begin to forgo the major labels even more and create and build their own teams and revenue models.  Regardless of what occurs in the next few years, it is very evident that the music industry is thriving, due to new technology inserted everyday into the climate.

 

Works Cited

 

360 Deals and What They Indicate About the Future of the … (n.d.). Retrieved December 8, 2016, from http://www.kentlaw.edu/perritt/courses/seminar/Basofin-360%20Deals-FINAL.pdf&p=DevEx,5045.1

 

Buyer Beware: Why Artists Should Do A 180 On “360” Deals. (n.d.). Retrieved December 08, 2016, from http://www.billboard.com/biz/articles/news/1209534/buyer-beware-why-artists-should-do-a-180-on-360-deals

 

Caught In Time: The Music Industry’s Struggle To Adapt. (n.d.). Retrieved December 08, 2016, from http://www.hypebot.com/hypebot/2013/02/caught-in-time-the-music-industrys-struggle-to-adapt.html

 

@. (n.d.). Chance the Rapper, Lil Wayne, and 2 Chainz Trash a Label Office on ‘Ellen’ Retrieved December 08, 2016, from http://www.ew.com/article/2016/09/15/chance-rapper-ellen

 

@. (2016). Chicago’s Chance The Rapper Of ‘No Problem’ Makes Grammy History; Gets 7 Nods Without Label Help; Even Exceeds Adele’s Number Of Nominations. Retrieved December 08, 2016, from http://www.newseveryday.com/articles/58262/20161207/chicago-s-chance-the-rapper-of-no-problem-makes-grammy-history-gets7-nods-without-label-help-even-exceeds-adele-s-number-of-nominations.htm

 

Crook, J., & Tepper, F. (n.d.). A Brief History Of Spotify. Retrieved December 06, 2016, from https://techcrunch.com/gallery/a-brief-history-of-spotify/

 

McElhearn, K. (2016). 15 years of iTunes: A look at Apple’s media app and its influence on an industry. Retrieved December 01, 2016, from http://www.macworld.com/article/3019878/software/15-years-of-itunes-a-look-at-apples-media-app-and-its-influence-on-an-industry.html

 

The New Pioneers: Chance the Rapper Is One of the Hottest Acts in Music, Has a Top 10 Album and His Own Festival — All Without a Label or Physical Release. (n.d.). Retrieved December 06, 2016, from http://www.billboard.com/articles/news/magazine-feature/7468570/chance-the-rapper-coloring-book-labels-grammy

 

For many Americans, this time of year is filled with family memories, food, and celebrating holidays.  But for over 74.5 million, this time is also associated with intense shopping for Christmas presents and overcrowded malls.

The day after Christmas, otherwise known as Black Friday, is typically a time where many Americans head to their local malls in search of door buster deals and savings.

Studies estimate that over 30% of an average retailer’s sales comes from the six-week time period from Thanksgiving to Christmas.

Although almost 100 million Americans are still choosing to shop on Black Friday, and now over Black Friday weekend, the number of Americans has been declining over the past few years.  In 2015, 102 million shopped over Black Friday weekend but when compared to the 2014 numbers (133.7 million), many people are choosing to not partake in the Black Friday festivities.

Black Friday, although still very popular, is no longer becoming the buzzy, attractive thing to do the day after Thanksgiving, as the popularity and willingness of Americans to brave the crowds for a deal declines.

So, why are sales and the number of Americans choosing to shop declining?  As many currently believe, the economy is doing much better than in previous years, so sales should be increasing.

Experts believe that one of the factors leading to the decline in Black Friday shoppers is the lack of credit card debt.  Many shoppers currently are using their own money, or cash, to spend on Black Friday consumption, rather than credit cards.

Also, many people throughout the country are still very concerned about the economic state of the United States, as people are still recovering from the recession and economic crisis of 2013.

Many also attribute the decline of shoppers to the increase in online shopping.  Many of the big-box consumers, like Target and Walmart, offer the same low price deals online.  This encourages many to stay home and avoid the crowds while still being able to save and get the deals that they are looking for.

In 2015, the National Retail Federation (NRF) reported that more Americans shopped online the three days after Thanksgiving than in stores.

While many large retailers look to Black Friday for a substantial portion of their sales, some stores, like REI have chosen to close down on Black Friday completely.  REI now encourages their customers to #OptOutside and pays all their employees time off for the day.

In an interview with Business Insider, REI CEO Jerry Strizke said that he wanted to make a statement against the trend of opening around a national holiday. “I was looking at the chaos of Black Friday and how more and more stores were opening on Thanksgiving and it just didn’t feel right.”

Although Stritzke might feel this way and take a stand against Black Friday shopping, no other retailers have made this move to shut down so far.  As shopping numbers decline, will other retailers decide this is a change to make as well?

http://www.businessinsider.com/rei-closed-on-black-friday-2016-11

http://www.economist.com/blogs/economist-explains/2015/12/economist-explains

https://www.thebalance.com/what-is-black-friday-3305710

 

 

Suddenly, music is everywhere.  We hear in while on our daily commutes, in stores and restaurants, and all throughout our everyday lives.  In today’s climate, music is very easy to access and to consume.  We are able to access any type of music through the phones and are able to pick and choose each song we want to listen to.  In the past few years, companies like Pandora and Spotify have made it so easy for us to access music on-demand from the devices we hold in our hands.  These firms have disrupted the previous revenue models of selling individual tracks for both the traditional music industry and the artists themselves, all while simplifying the user listening experience for consumers.

Many music industry experts believe that this will be the year that the market will correct and stabilize and will determine which firms will be able to survive the consolidation of the music consumption streaming market.

With the introduction of all of these new companies like Spotify and Pandora,  iTunes no longer has a monopoly in the music consumption market.  Streaming services now offer more music at a lower price, essentially making it impossible to justify purchasing one song for a dollar.

There are currently many streaming services in the market, all hoping to win the majority stake in the industry.  Currently, Spotify is the largest in the United States, followed closely by Pandora and Apple Music.

Although there are many various streaming companies currently in the market, they all offer slightly different benefits for the consumer and attract different sectors of the population.

One of the obvious current leaders is Spotify.  Founded in 2006, Spotify is the largest streaming service in the United States today, with over 40 million paid subscribers.  Competitor, Apple Music, which has only been released for about a year, has 17 million paid subscribers for comparison.

Over the past few years, the consumption of music has changed dramatically, from physical record sales to individual song purchases made on iTunes to now the unlimited consumption on streaming services.

According to recent numbers published by Billboard, the industry is looking to have the highest numbers of growth and sales since 2009. Currently, over 411 million units, measured in “total album consumption units,” have been sold in the first three quarters of 2016.  These numbers are set surpass the 2009 sales number set at over 489.8 million albums.

The Recording Industry Association of America (RIAA) midyear report found that the overall industry, not just record sales, was up over 8.15% since 2015 as well.

Many attribute this growth and success to streaming services, as they have created alternative revenue sources for the artists and music industry.  A few years ago, many downloaded their music illegally.  Today, streaming services pay out the artists who have songs on their platforms.

However, one of the biggest criticisms of the music industry today is that the revenue from streaming is nowhere near the physical streaming sales numbers.  Although neither Spotify nor Apple Music releases the actual payout numbers to artists, leaked reports reveal payments of $0.006 per stream by Apple Music.  Additionally, according to Spotify, instead of a per stream payout, they pay out 70% of revenue to rights holders.  This typically averages out to $0.006 and $0.0084 per stream.

These numbers per stream are tiny; it is estimated that the payout for each stream is between $0.004 and $0.008 depending on each service.  For the larger artists who receive radio play and are on major labels, this can be a huge revenue stream, with annual payouts ranging from $100,000 to $500,000 per year.  However, for the small artists who might only have a few thousand fans on Spotify or Apple Music, this can threaten their survival in the business.
Many smaller artists and industry experts have criticized streaming services for their lack of payout, and believe that the streaming services should change their compensation models. However, it is not just small, indie artists who believe this should change.

In June 2015, Taylor Swift posted a Tweet criticizing the Apple Music launch.  She believed that the service should pay out artists during the three-month trial period, which at the time, they were not planning to do.  In a letter entitled, “To Apple, Love Taylor,” she wrote, “I’m sure you are aware that Apple Music will be offering a free 3-month trial to anyone who signs up for the service. I’m not sure you know that Apple Music will not be paying writers, producers, or artists for those three months. I find it to be shocking, disappointing, and completely unlike this historically progressive and generous company.”

Apple VP Eddy Cue responded, on Father’s Day, that Apple would be compensating the artists during the trial period, reversing his initial decision to withhold compensation during the trial period without revenue for the firm.  With this single tweet, Swift was able to alter the business model of a huge media and tech conglomerate like Apple and was able to stand up for all of the smaller artists who do not have a voice as powerful and as large as Swift, creating a larger change in the streaming industry.

Swift’s label head and president of Big Machine Records, Scott Borchetta, has been very outspoken regarding his views on streaming and has called out Spotify by name. “Ninety percent of those outlets that we visited in that first year are out of business, so 10 years from now, I guarantee you at least half of those streaming services that exist today will not exist, at least not freestanding.”

While there are many like Borchetta and Swift who are outspoken against streaming, for many artists, platforms like Spotify have helped to launch their careers and gain exposure that they could only previously dream of.

For example, Hozier was an unknown artist until 2013, when he was introduced into a Spotify artist discovery program and added to a playlist, and eventually was added to more, increasing his daily streams from an initial 15,000 streams worldwide per day to over 2 million a day (Billboard).  With the support and push of Spotify, Hozier was introduced to over 11 million new fans over the course of two years.

Streaming services can provide success to the lesser-known artists, but many people are weary of the services, as there is an influx of firms in the market that has is constantly changing and evolving.

At today’s point, the streaming services in the market are still in the development stage.  Many, including Spotify, are not yet profitable.  Even companies like Pandora, which has been in business since 2000, has reported losses of millions in the past few quarters.

So, if the companies aren’t making money but have millions and millions of customers, how will they ever be profitable?

The solution, many industry executives and trend predictors believe, is to move away from a “freemium model” and transition to one that is only paid.  In the current economic climate, “freemium” means that companies like Spotify and Pandora offer a free, ad-supported version as well as a paid version for their customers.  Many believe this will begin to vanish, as Apple Music only offers a paid version and revenue would increase if everyone were forced to pay.

With these changes, some services like Pandora and Spotify will pivot, encouraging consumers to pay for access to a streaming service.  However, will new players in the market choose to create a free model to play with these tech giants?

According to the Financial Times, SoundCloud, a popular site for
remixes and unofficial music, is the next purchase for Spotify.  This could be beneficial, as SoundCloud needs help financially and the purchase would diversify Spotify’s catalogue, as it would include more original content and more indie label releases.

The Spotify/SoundCloud acquisition could be one of many that will occur in the next few years, as the industry condenses and corrects from the current oversaturation.  There are so many players in the market currently and it will be important for the consumers to express their wants and needs in the streaming market so that the companies best suited for the consumer and industry survive.  In a few years,

Three years ago, Spotify and streaming were words that were uncommon in our everyday vernacular.

 

 

Sources

http://www.billboard.com/biz/articles/news/record-labels/7534386/heres-why-2016-is-set-to-be-music-industrys-best-year-since?utm_source=twitter

http://www.billboard.com/articles/business/6656722/spotify-spotlight-support-major-lazer-hozier

http://fortune.com/2016/09/29/spotify-soundcloud-acquisition/

http://www.digitaltrends.com/music/apple-music-vs-spotify/

http://www.digitalmusicnews.com/2016/05/24/apple-music-pays-every-country-worldwide/

http://time.com/3940500/apple-music-taylor-swift-release/

http://www.musicbusinessworldwide.com/scott-borchetta-50-of-todays-streaming-services-will-be-dead-in-a-decade/

http://www.forbes.com/sites/hughmcintyre/2016/09/28/report-spotify-is-in-talks-to-buy-soundcloud/#798f59366a49

 

 

In today’s climate, music is very easy to consume.  We are able to access any type of music through the phones that we carry around with us at all times and are able to pick and choose each individual song we want to listen to.

Many music industry experts believe that this year, 2016, will be the year that our current music climate changes.  They believe that this year will be the year that the market will correct and stabilize and will determine which firms will be able to survive the consolidation of the music consumption streaming market.

Although there are many various streaming companies currently in the market, they all offer slightly different benefits for the consumer and attract different sectors of the population.

One of the obvious current leaders is Spotify.  Founded in 2006, Spotify is the largest streaming service in the United States today, with over 40 million paid subscribers. 

Competitor, Apple Music, which has only been released for about a year, has 17 million paid subscribers for comparison.

While the streaming services were once considered enemies of the record labels, today, the major record labels have all created partnerships with the services for exclusive releases and deals for their artists.

While the amount of physical record sales has declined dramatically since the creation of iTunes, for the past year, record labels and the music industry as a whole have showed dramatic growth.

According to recent numbers published by Billboard, the industry is looking to have the highest numbers of growth and sales since 2009.  Currently, over 411 million units, measured in “total album consumption units” have been sold in the first three quarters of 2016. These numbers are set to meet 2013 album sales total (415.4 million) and surpass the 2009 sales number set at over 489.8 million albums.

The Recording Industry Association of America (RIAA) midyear report found that the overall industry, not just record sales, was up over 8.15% since 2015 as well.

Many attribute this growth and success to streaming services, as they have created alternative revenue sources for the artists and music industry.  A few years ago, many downloaded their music illegally and no profits were shared with the artists.  Today, streaming services pay out the artists who have songs on their platforms.

However, one of the biggest problems and criticisms of the music industry today is that the profits from streaming are nowhere near the physical streaming sales numbers.  Although Spotify nor Apple Music does not release the actual payout numbers to artists, leaked reports reveal payments of $0.006 per stream by Apple Music.  Additionally, according to Spotify, they pay out 70% of revenue to rights holders for each stream, which averages out to $0.006 and $0.0084 per stream.

These numbers per stream are tiny; it is estimated that the payout for each stream is between $0.004 and $0.008 depending on each service.  For the larger artists who receive radio play and are on major labels, this can be a huge revenue stream, with annual payouts ranging from $100,000 to $500,000 per year.  However, for the small artists who might only have a few thousand fans on Spotify or Apple Music, this can be detrimental to their income and ability to survive, as they are receiving little money based on their amount of streams and exposure.

Many smaller artists have criticized streaming services for their lack of payout, and believe that the streaming services should change their compensation models. However, it is not just small, indie artists that believe this should change.

In June 2015, Taylor Swift posted a Tweet criticizing the Apple Music launch.  She believed that the service should pay out artists during the three-month trial period, which at the time, they were not planning to do.  In a letter entitled, “To Apple, Love Taylor,” she wrote, “I’m sure you are aware that Apple Music will be offering a free 3 month trial to anyone who signs up for the service. I’m not sure you know that Apple Music will not be paying writers, producers, or artists for those three months. I find it to be shocking, disappointing, and completely unlike this historically progressive and generous company.”

Apple VP Eddy Cue responded, on Father’s Day nonetheless, that Apple would be compensating the artists during the trial period.  With this single tweet, Swift was able to alter the business model of a huge media and tech conglomerate like Apple and was able to stand up for all of the smaller artists who do not have a voice as powerful and as large as Swift, creating a larger change in the streaming industry. 

While there are many who are outspoken against streaming, for many artists, platforms like Spotify have helped to launch their careers and gain exposure that they could only previously dream of.

For example, Hozier, an unknown artist previously, was able to launch his career with the help of Spotify.  In 2013, he was introduced into a Spotify artist discovery program and added to a playlist, and eventually was added to more, increasing his daily streams from an initial 15,000 streams worldwide per day to over 2 million a day (Billboard).  With the support and push of Spotify, Hozier was introduced to over 11 million new fans over the course of two years.

Streaming services can provide success to the lesser-known artists, but many people are weary of the services, as there is an influx of firms in the market that has is constantly changing and evolving.

At today’s current point, the streaming services in the market are still in the development and start-up stage.  Many, including Spotify, are not yet profitable and are having a difficult time remaining present in the current market.  Even companies like Pandora, which has been in business since 2000 has reported losses of millions in the past few quarters.

So, if the companies aren’t making money but have millions and millions of customers, how will they ever make money?

The solution, many industry executives and trend predictors believe, is to move away from a “freemium model” and transition to one that is only paid.  In the current economic climate, “freemium” means that companies like Spotify and Pandora offer a free, ad-supported version as well as a paid version for their customers.  Many believe this will begin to vanish very soon, as Apple Music only offers a paid version and profits would largely increase if everyone was forced to pay for a streaming service if they wanted access to it.

With these new changes, some services like Pandora and Spotify will change, encouraging and pressuring consumers to pay for access to a streaming service.  However, will new players in the market choose to create a free model to play with these tech giants?

SoundCloud, a popular site for remixes and unofficial music, is being seen as the next purchase for Spotify.  Many believe this would be a smart move, as SoundCloud needs help finanacially and the purchase would diversify Spotify’s catalogue, as it would include more original content and more indie label releases.

While there has been no decision released for Spotify to purchase SoundCloud, the industry is constantly evolving.  There are many players in the market currently and it will be important for the consumers to accurately express their wants and needs in the streaming market so that the companies best suited for the consumer and industry survive.

Three years ago, Spotify and streaming were words that were uncommon in our everyday vernacular.

 

Sources

http://www.billboard.com/biz/articles/news/record-labels/7534386/heres-why-2016-is-set-to-be-music-industrys-best-year-since?utm_source=twitter

http://www.billboard.com/articles/business/6656722/spotify-spotlight-support-major-lazer-hozier

http://fortune.com/2016/09/29/spotify-soundcloud-acquisition/

http://www.digitaltrends.com/music/apple-music-vs-spotify/

http://www.digitalmusicnews.com/2016/05/24/apple-music-pays-every-country-worldwide/

http://time.com/3940500/apple-music-taylor-swift-release/

 

 

For many people, exercise is a part of their everyday routine.  And for others, it is always something that looms over them, as something they should do to improve their health.  Everyone finds themselves thinking “I should work out more,” or “I should really go the gym,” once in a while.

For those fitness fanatics and the casual user trying to get into the habit of exercise, fitness classes are a popular option for motivation and training.  However, they can be very expensive – ranging from $15 to $40 for a single class.

ClassPass is a start-up that offers a subscription-based model for fitness classes in over 20 cities all over the country.  The service offers 5, 10, or unlimited classes per month and the subscriptions range from $50-$200 per month. 

Since their launch in 2013, the company has booked over 18 million class reservations and has raised $84 million in funding.

The company has been hailed as the next Uber, as many other companies are using the ClassPass business plan as a model for other types of subscription services, like blowouts.

While this service has become very successful over the past few years, many fitness studio owners have criticized the company for their low payments to the studios and the detraction of business from these boutique studio owners.

Each month, ClassPass pays out an undisclosed sum to their studio partners, depending on how many people booked a class reservation through their system.  Although the exact number is not released by ClassPass, many sources say that ClassPass pays about fifty percent of the retail price.  So, if a class is typically priced at $30, ClassPass will pay only $15 for their customer to attend the same class.

This elastic pricing between customers is what is both the most intriguing and what has caused the most problems in ClassPass’s brief history. 

Many studio owners feel very contradicted in regards to ClassPass.  On one hand, by using ClassPass, they are filling their classes and receiving revenue that they would have otherwise not been generating.  However, many regular studio goers get fed up with the ClassPass users who are paying a discounted rate and make the classes much more crowded.

So, which is more important?  Having bodies in the room or having loyal customers who are willing to pay the full rate, which for some classes can be up to $40 per class, for the same class?

While many studios have chosen to participate in ClassPass and chose to limit the number of spots and the time of day that the classes are available to ClassPass users, there are some studios that have chosen to forgo the ClassPass option.

For example, SoulCycle, an always popular option especially in Los Angeles, refuses to join ClassPass and instead charges $34 a class.  Their classes are almost always full and people are willing to pay full price.

While the idea is that ClassPass will encourage their users to become loyal followers of a certain fitness class and instead book through them, many stay ClassPass users and bounce around each week from studio to studio.

As ClassPass matures and expands, will the benefits outweigh the costs for studios around the country and will studios continue to use their service?  And, as prices increase for customers, will customers still view the service as a value?

For many people in the United States, the unemployment numbers that are used to measure the strength of the economy are imperative to their confidence in the economy.

But really, how strong is the US economy right now?

While most people in the United States today believe that the economy is growing just from popular knowledge and news in the media, there are many people, including market analysts and economists, who use certain economic indicators, like the jobless claims indicator to measure the true strength and current climate of the current economy.

This economic indicator, known as Jobless Claims, reports the number of individuals in the United States that newly filed for unemployment insurance that month.  This can help investors, and every day citizens shape a perspective and determine how they perceive the current state of the United States economy.

This data is also seasonally adjusted, in order to account for seasonal hirings and firings during certain times of the year, like before the holiday season in November.

Most economists believe that the four-week moving average is a more accurate number to gauge the economy, as the week-to-week number is volatile due to immediate changes in the economy or country.

According to the report published on August 25 by the United States Department of Labor, the level of jobless claims is at a historically low level, as there are currently low levels of layoffs and many people are not filing for unemployment insurance.

As released in the last report, 261,000 people filed in the past week lowering the level by about 1,000 claims overall.

Economic analysts believe that the jobless claims numbers will continue to remain similar throughout the next few months, as the economy continues to grow and the labor market improves.

While many citizens believe that the current economy has improved since the economic downturn a few years ago, the jobless claims indicator proves that the economy has drastically improved.

The number of people who have newly filed for unemployment insurance, known as the jobless claims, has remained under 300,000 per week for over 77 weeks.  This record is the longest streak in the US labor market since 1970.

While things seem to be looking up for the economy, it is important to understand that people are still filing for unemployment insurance.  As the unemployment rate is not currently at zero percent, there are still people who are looking for jobs and unable to find them, and therefore there are people who need the assistance from the unemployment insurance.

The number of jobless claims is at a historical low, yet there are still many people who have distrust and lack confidence in the state of our economy.  While the jobless claims indicator paints a pretty and strong picture of the economy, it is very important to look and identify other indicators that allow a much more inclusive and authentic picture of the current state of our economy.