Listen Up, for a Price: YouTube Plans CRM Clampdown on Free Tunes

Youtube CRMLike Taking Candy from a Piñata

For many brand marketers, today’s unhampered digital flow of free information has empowered consumer control to convey powerful insight back to brands. However, in the music industry, Napster’s introduction in 1999 burst open the piñata of purchased music, transforming customer experience to consumer entitlement practically overnight. Over the past 15 years, the music continues to spill from the source while artists and record companies battle to scale this mounting landslide of lost revenue.

Now, some major labels and streaming services have decided enough is enough, and plan to significantly stem consumer access to free music. As it turns out, the “broken” record (industry) was just skipping, and may be soon back on track.

Finding a Needle in the Pay-to-Play Stack

Many music enthusiasts think back longingly on past decades when the vinyl record reigned supreme, when customer experience meant the thrill of journeying to a record store and buying a brand new LP, watching the physical embodiment of a complete musical experience make its slow revolutions around the turntable. Suffice to say, aside from a niche resurgence of vinyl mostly among hipsters, those days are long gone. However, the proposed plans to curtail lost music profit does not involve reincarnating the physical record or compact disc, but increasing subscription-based access and retrenching existing subscription free trial periods.

Many music-streaming services such as Pandora, Spotify, and Beats Music already offer ad-free paid subscription packages, in addition to unpaid offerings with ads.

Google’s YouTube has long been the ultimate host to seldom-impeded access to free music for consumers around the world. In an intriguing move, however, even the video giant has announced details for Music Key, YouTube’s first paid subscription offering that will cost $10 a month.

Digital streaming services aren’t the only ones looking to curb the flow of free streaming. Major record labels Universal Music Group, Sony Music Entertainment, and Warner Music Group are all making a concerted push toward faster paid subscription acquisition, shorter free trial periods, and more ads on free services, in order to boost subscriptions and reduce churn.

Hey, I Was Listening to That!

Inevitably, music fans may not react amicably to having their earbuds suddenly yanked away from them. The challenge for marketers in a unique landscape where companies must remove services long-offered for free is this: How should organizations approach CRM and customer engagement when users aren’t technically customers to begin with, in the literal sense? Is there a way to appropriately reconcile the problem of free music while also reducing churn and guiding listeners onto a path of paid subscription access? Since the days of Napster and other file-sharing platforms, streaming services have already come a long way, careful to not tip the scale of consumer power too abruptly.

However, some streaming services like Spotify believe that even slight hedging could have negative ramifications on existing listener loyalty.

“Our free service drives our paid service,” Daniel Ek, Chief Executive for Spotify, said in the company’s blog. “Today we have more than 50 million active users of whom 12.5 million are subscribers each paying $120 per year… What’s more, the majority of these paying users are under the age of 27, fans who grew up with piracy and never expected to pay for music.”

It’s undeniable that subscription-based music streaming is the future of music, at least for now. If more streaming services can successfully sell paid subscription packages, as Spotify has, and can also grant due compensation to artists and labels, the result will be a resounding win for customer experience. If an experience is powerful and emotional enough to lead consumers to pay for something that was offered to them for free elsewhere, perhaps the digital needle of the record industry is rediscovering its groove after all.

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