Will 25% of the world buy music?

Something Marc Geiger said on This Week In Music last week rang a bell—he forecast two billion paying subscriber accounts for some kind of music streaming at some time in the future (you’ll find it around 38:00 on the webcast).

If it had been Daniel Ek (Spotify) I wouldn’t think twice but everything else Marc Geiger said made a lot of sense. He seems to come at the music business from a similar angle to me—it’s all about artists and fans. To be fair neither Geiger nor Ian Rogers suggested this was happening next week, and they did say this kind of scale might come from new music service front-ends like Turntable.fm rather than simple playlist radio.

Now, we know the music industry has failed to do anything like that scale and they’ve been trying (sort of) for over a decade. Paying subscriber accounts are still single figure millions and as far as I know none of these businesses have ever made a profit. But that’s not what Geiger was talking about—he said once the music was available some kind of consumer layer would transform the whole game.

And this is the bell that rang. In 2006 I hung-out on an invitation-only music industry forum where they discussed mobile music among other things (as Ian Rogers mentioned this debate was common at that time). I thought there was no way to merge the user interface of a cellphone and an iPod, I just couldn’t see it. One of the members of that forum who always made a lot of sense and clearly knew a thing or two told me to wait a year and it would all be clear. He must have seen an early iPhone and as we now know he was right.

So, here we are again—or are we? A music industry bloke who makes enormous sense just drops into the conversation “two billion paying music subscribers” like your best friend might say he’s built a spaceship. WTF?

He may be right but there is a mountain to climb. Any time this decade two billion accounts would be around a quarter of the world population and one of my touchstones for music take-up is that only 40% of the UK population ever paid for music. I’m not talking about Internet piracy, this was always the rule of thumb for CD buyers. So his two billion now looks like at least half of all music buyers.

Then there’s another fly in the ointment. On average those CD buyers never spent anything like £120 a year, the current going rate for a mobile Spotify account. The average consumer spend on recorded music in 2002/3 (a record year as I say elsewhere and often) was around £50. Which means Marc Geiger’s music subscribers would spend all their money on the sons of Spotify and buy no additional recorded music at all.

In fact the ointment is full of flies: would people use just one service? would these services have all the music they want (they don’t right now)? would subscribers be happy to pay forever and keep nothing? how about those pirate economies (Russia, China, …) where the average spend on recorded music is zero? And so on…

Sadly I think that’s a mountain (of fly infested ointment perhaps) we will never get over. Geiger hopes these new web services will earn the music industry ten times what it ever earned before—which translates to our UK record buyers spending £500 a year instead of £50. Not in my lifetime. But I do remember saying something similar about the iPhone.

It’s an interesting idea. If the sons of Spotify really did that much business I’d look much more favourably on music subscriptions and I’ve been wondering how that kind of future might work. I just can’t see it though.

Edit: This is an interesting perspective from Ian Rogers at DMFW just the previous week I think. It seems there are not yet 2 billion web users so Marc Geiger’s forecast is even further ahead of its time than I thought.

Don't just sit there fuming, write something!