1. Streaming is in trouble
2. Spotify has had layoffs
3. Suggestions that Tidal is in trouble
4. Streaming is "far too cheap"
5. Majority of musicians that aren't megastars get paid peanuts
His possible solutions
1. Increase price significantly
2. Restrict the amount of content available to make it more like Netflix
(only a selection of releases can be streamed at any time)
3. Don't pretend to have answers.
Spotify and Tidal problems
"The streaming services have a bad situation, there's no margins, they're not making any money," Iovine reportedly said. "Amazon sells Prime; Apple sells telephones and iPads; Spotify, they're going to have to figure out a way to get that audience to buy something else. If tomorrow morning [Amazon CEO] Jeff Bezos wakes up and says, 'You know what? I heard the word "$7.99" I don't know what it means, and someone says, 'Why don't we try $7.99 for music?' Woah, guess what happens?"
Spotify's revenue jumped 40% during the first half of 2017, yet the company remains unprofitable even though gross margin expanded to 22%, according to The Information last month. It's not hard to imagine what would happen if Spotify was forced to cut subscription prices by 20% to compete, as Iovine hypothesizes.
"The streaming business is not a great business," Iovine added. "It's fine with the big companies: Amazon, Apple, Google... Of course it's a small piece of their business, very cool, but Spotify is the only stand-alone, right? So they have to figure out a way to show the road to making this a real business."
Streaming is far too cheap
The Industry got the pricing right!
If I am being honest, I could live without paid music streaming fairly easily. I could go back to my well curated collection of music and happily listen to that alongside free radio and be very happy. However, having access to streaming means I will hear more new artists and spend more money at their concerts (this has already happened many times). Without that initial listen, I would not bother spending a king's ransom on two tickets to some band I never heard. Heck, when I see someone is coming to town and I never heard of them, I will pull up their tracks on Apple Music and decide if I want to go and hear them live. Without streaming, that isn't happening.
I should mention that we are already seeing some price increases as inflation rises, but I don't see drastic increases in price anywhere on the horizon.
Adopting the Netflix model?
Artist aren't paid enough
"... This lively, entertaining report explores the decline of the recording industry due to arrogance, corporate mergers, Internet theft, ethically challenged radio monopolies (Hello, Clear Channel) and plain lousy artistic development. Instead of encouraging new, innovative artists, desperate record companies try to recycle old ideas. Like whipping up a hard rock supergroup, Velvet Revolver, with head-banging alumni from Guns N' Roses and Stone Temple Pilots. Oy. And the banal beat goes on."
What is the solution?
I have looked at how the services have split up the revenue and that would be the best place for the services to change. It would take a separate article to discuss the method of how most services pay out money. However, I would advocate for them to look at what each individual streams in a given month and then split that user's number of plays for each artist by the amount of subscription paid that month to come up with a figure. I think Tidal was going to move to a model similar to this. I think it would help smaller artists.