Spotify, Pandora, Rhapsody, Rdio, Google Play, YouTube, iTunes Radio…. every US based music lover surely has heard of at least one of these streaming giants before, or is using one (or more) to listen to their favourite tracks. But fewer people actually realise the ‘battle’ that takes place behind the curtains of the music industry: a battle for the masses. When it comes to US, two of the biggest music platforms are definitely Pandora and iTunes. But how do they fare on a global scale?
Battle for the masses
When it comes to waging a war on the streaming market, who has the advantage for the US ‘battlefield’? Volume is important for streaming music, since income per purchase is low. Let’s take a closer look at the two before mentioned services, and how they compete in their local combat zone…
US: iTunes Radio vs. Pandora
Although only launched a couple of months ago, the popularity of iTunes Radio was imminent from the start. iTunes managed to get 20 million customers to listen to 1 billion hours of music on the Radio service within a month. Years of experience in music industry — and let’s not forget the fact that they’ve been market leader in the digital marketplace for ages — have proven key elements of success. iTunes Radio is (compared with Pandora) cheaper, has a higher quality of sound (256kbps vs. 192kbps on Pandora) and, of course, cloud storage. Pandora, on the other hand, is present digital radio’s day one. As such, it has a staggering userbase of 71 million. Pandora is stacked with a huge catalogue, and excellent curating for all genres. On that level, they are also competitive with The Music Genome vs. iTunes’ Genius. They both offer good variety of all musical genres. So in short, for the US market, these are certainly well-matched opponents, both taking a big piece of the pie of the digital music market. But there’s more to music market than just the US…
Battlefield Europe: What’s to gain and what’s to lose?
Europe has always been the focal point when it comes to lots of artists and bands, and it goes without saying that economically Europe is one of the strongest forces in the world. Most important in this view, the musical architecture of the two continents is pretty much comparable, apart from local genres of course. But the wide variety of pop music is shared to a large extent. So what’s to win, and what’s to lose?
To begin with, competition is fierce in the streaming market. Numerous streaming services and giants like Spotify, Deezer and Google Play all have substantial market shares. The difficulty of getting a foothold in a crowded market must not be underestimated (the fact that both iTunes Radio and Pandora did not yet cross the ocean is proof in itself that they in fact take Europe very seriously).
However, getting your business on the European streaming battlefield does give you entrance to a strong music market that has seen growth on digital music for years. Take the Nordics (Sweden, Norway, Finland, Denmark) for example: revenue from digital music sales exceeds physical sales. Services like Spotify and Deezer have spread throughout Europe, warming up the market place for their US-based competitors. Besides that, most European countries are filled with early adopters, and are very open-minded to new influences. Europe’s music market can be seen as a barometer for global trends; business models that work in Europe are normally very viable for long-term operations.
For iTunes, well, everybody knows (or owns) Apple products and Apple is huge in Europe. iPhones, iMacs, iPads; all perfect tools for a good user experience of iTunes Radio. Pandora, on the other hand, could aim for the highest by setting the goal to become the best replacement for terrestrial radio.
In the end, crossing the ocean and entering the European market sounds like a major opportunity for both, but they’d have to brace themselves for some fierce resistance… Question is, can they reach the masses and can they battle not only each other but also Europe’s market leaders?
Invading Europe: who would be best suited to take on European competitors?
Pandora will have an extra threshold to enter markets abroad. That’s because Pandora does not have deals with the major record companies (unlike iTunes); technically speaking, Pandora is a radio station and has a different set of rules and laws to abide to. For other territories, Pandora would have to sign with collecting societies, the European counterparts of SoundExchange, and they are large in numbers. Cutting deals with all the numerous collecting agencies in Europe is elaborate and can be seen as the biggest challenge for entering Europe.
This is actually a big competitive advantage that iTunes has over Pandora; iTunes has to live up to different rules and legislations as they pay labels directly. iTunes, unlike Pandora, has all the deals necessary to pay rights holders, which in this case are record labels. Since iTunes has already been paying labels their shares of the download sales for a decade, iTunes radio is more like a next step in their development. They have the customers, they have a well-established name, a perfectly branded store and superb user experience. All weapons to reach the European masses are set; invading Europe is a matter of time for iTunes Radio. As for Pandora…. They managed to enter Australia and New Zealand, and their massive userbase in itself proves that they are a force to be reckoned with for any market. However, it will take both time and effort…
The future: will Pandora and iTunes Radio be having a similar battle in Europe?
That of course will be highly unlikely. Given the scope of competitors and the density of the European market, chances are high that both parties will wage a different kind of war on European soil. Being one of the big European players means playing an away match for both companies (however iTunes will have an advantage there). As said many times before, the future is hard to predict but if there’s a time when iTunes Radio and Pandora are both present in Europe, they won’t have the big market shares like they now have on their home ground. Whereas Pandora can be a good replacement for terrestrial radio, iTunes has a far larger scope (products, store, wide network) and is more likely to reach the masses needed for streaming music successfully. Whatever the future brings, we can only wait until our European market is enriched with two excellent services.
Unlike in a real war, where there are no winners, there will be a clear winner in this case: the customer. Because for all music lovers, we can state that having these two great services to chose from will be victory in the end!
Pandora’s Heidi Browning speaks at Midem 2014. More in our full conference programme.
Bas Kruijssen is new media manager for Black Hole Recordings, the Dutch dance music label co-founded by superstar DJ, Tiesto. He’ll be back on midemblog soon; meanwhile, follow him on Twitter here; and watch his “Who needs labels?” interview here!