Pandora CEO Says A Permanent, Free On-Demand Service Is 'Unsustainable'
December 2, 2015 at 4:09 AM (PT)
PANDORA CEO BRIAN MCANDREWS has written an op-ed piece in BUSINESS INSIDER, writing "it is far too easy for on-demand consumers to continually 'own' music for free. Not just a free trial, but free all the time."
"Years ago," MCANDREWS continues, "if anyone could have walked into a record store, legally taken every record home for free, and listened to the exact songs they wanted for as long as they chose, the music industry model would have completely broken down. But that is exactly the situation the music industry faces today."
MCANDREWS adds, "Free-to-the-listener on-demand services are driving down music’s intrinsic value by creating a 'gray market'. By that I mean a market where listeners can perpetually access licensed, free, on-demand music. An ever-growing number of listeners are happily lingering in music’s gray market, enjoying full access to all music without paying for the privilege and with little incentive or intention to convert to a full-paying subscription. Defenders of free on-demand music will surely counter by reminding us every song they play is paid for with royalties. I also expect some will argue that free on-demand is an essential on-ramp to a sustainable subscription business. And both of these statements may well be true. But I would argue that an on-demand on-ramp is one thing; a permanent, free on-demand highway is another. The first is good for the long-term health of the music industry. The second is not."
He concludes, "This gray market is unsustainable. If consumers can legally listen to free on-demand music permanently without converting to paying models, the value of music will continue to spiral downward to the benefit of no one."
Read the full post here.