Music streaming "to overtake downloads"

 

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By Barry Collins

Posted on 3 Jun 2009 at 15:47

Streaming will overtake download services to become the dominant force in the online music industry, according to industry insiders.

The claim comes in the wake of the PRS cutting the amount of royalties streaming services have to pay songwriters by about a third.

Sites will now pay the PRS 0.085p per track, compared to the 0.22p they paid previously. On-demand streaming services still have to pay the record labels about 1p for every track streamed, however.

Steve Purdham, CEO of music service We7, says the move will accelerate the growing trend towards online streaming which has seen newcomers such as his site and Spotify attract millions of users in less than a year. "Over the next 12-24 months you'll see a move towards listening [online]," Purdham told PC Pro.

"Why do you actually need to have something downloaded on your PC? The streaming idea is really the future."

Purdham said the new fee structure will help streaming services to build up huge audiences that are attractive to advertisers, although he admits that getting people to pay for premium, ad-free streams is a huge challenge. "When the free service is so good, it's very difficult to convince people to go for the pay service," Purdham admitted.

The new fee structure wasn't enough to immediately tempt back YouTube, which decided to remove music videos from its UK site earlier this year following a pricing dispute with the PRS. "We welcome any efforts to make licensing costs more realistic, but as we're still in discussions with the PRS to agree license terms for YouTube we're unable to comment further," parent company Google said in a statement.

One reason for YouTube's reticence may be that the overall PRS royalty rate has been raised from 8% of revenue generated from music to 10.5%. Music services will have to pay whichever is greater: the per-track fee or the 10.5% cut on revenue.

However, Purdham said he'd be surprised if even YouTube generates enough money from music videos to pay the 10.5% fee.