While you can't blame the companies for trying, new research shows what we reported last week: Consumers just don't want to pay very much for online streaming.
Released just as Apple finished unveiling Apple Music, Nielsen's extensive report examined the state of Canada’s music industry. While not the United States, its a very accurate proxy.
The Nielsen Music 360 report looked at, among other things, how much people are willing to pay for online music streaming services. They surveyed about 3500 people and concluded that the average person is willing to pay between $5.50 and $6.30 USD a month to listen to an unlimited amount of songs.
That's well short of the industry standard $9.99.
This supports the popularity of Spotify’s free ad-supported tier, the least expensive option currently available.
The findings are interesting, given Spotify is under constant pressure from music labels to do away with its free tier or stop "giving so many songs away."
Yet once again big content providers don't get it, and are insisting on using technology to give consumers a worse deal than they already have. Radio is, after all, free.
Rdio CEO Anthony Bay said in an interview that “the challenge with the $9.99 price point is it’s more than most people have historically spent on music.”
Which makes for an interesting dilemma, as since Nielsen started tracking streaming usage last July, streaming volume has gone up by 94 per cent.
This perhaps points to more innovation in the space in order to come up with a model that pleases both consumers and big record labels.
While each service will have to struggle with what plan to offer consumers, one thing is clear from the report: People won't be paying for multiple services.
The idea someone would have both a Pandora and Apple Music subscription just won't happen. In music streaming it will be a winner take all game, where consumers will have just one service and stick to it.
It will be interesting to see data on how consumers feel about TV streaming. The web TV industry currently wants users to maintain 5-10 subscriptions to get cable-like service, without live sports and with the $100 or so per month cable price tag.
If consumers feel about web TV as they do about streaming music, the thought they will buy five or more subscriptions is delusional.
Which bodes extremely well for Netflix and nobody else.