Beats Music got a lot of press Monday for nabbing the exclusive rights to a track that features Jay Z. The deal was seen by some as a sign that Beats may take a cue from Netflix (S NFLX) and battle competitors like Spotify with exclusive content deals. But the future of music subscription services isn’t about exclusive deals — it’s about binging.
What that Jay Z track is all about
First, it’s worth putting that Jay Z exclusive into perspective: Beats Electronics, which got recently acquired by Apple, (S AAPL) started to air a new World Cup-themed ad dubbed The Game before the Game earlier this month. The ad, which features raps by Jay Z, quickly became a hit online, and has already amassed more than 10 million views on YouTube. (s GOOG)
This week, Beats Music started to stream a remix of the track used in the ad. Beats got access to that remix a week before it appears on competing music services, which led Billboard to muse that exclusives could become key to Beats Music’s strategy going forward. The Verge assumed that it would be “impossible for any other service of its size” to get these kinds of exclusives.
Except it’s not impossible. Exclusive access to tracks or even entire albums a few days before the competition gets its hands on them is something that music services have been doing for a long time to differentiate themselves in a world where every service offers access to the same 30 or so million songs, for the same price, on the same devices.
Rdio recently got an exclusive Snoop Dogg track. Spotify at one point had an exclusive remix of Daft Punk’s Get Lucky. Jay Z distributed his latest album Magna Carta Holy Grail exclusively through Samsung for 72 hours before it hit the stores last summer. Deezer, Google (s GOOG) Play and everyone else is also experimenting with exclusives all the time, but thus far, none of those one-off deals have moved the needle for any of these services.
Netflix didn’t start with exclusive content, but with a large back catalog
There’s still something that music services can learn from Netflix — and Amazon (s AMZN) may have been the first to take notice. Netflix owes a lot of its success to binge viewing, allowing its users to burn through entire seasons of TV shows at their own pace. Binge viewing has defined how Netflix releases its own exclusives, with all episodes of new seasons becoming available at once.
But before Orange is the New Black and House of Cards, there were Lost, the West Wing and Battlestar Galactica — older shows that allowed people to discover things they missed on TV, re-watch their favorites and expand their pop culture horizon. What fueled Netflix’s initial growth wasn’t the latest shows that were on TV last night, but convenient access to the classics without breaking the pocket book.
That’s exactly what Amazon is now offering its Prime subscribers. Amazon’s newly launched Prime Music service also doesn’t have the latest and greatest. It only has about one million titles, compared to the 30 million that Spotify is offering its customers. Of course, one million is just about as much as Pandora (s P) has, and its more than 70 million monthly active users don’t seem to mind.
There are a lot more casual listeners than hardcore music fans
I believe Amazon’s Prime subscribers will be equally forgiving. That’s because Prime Music doesn’t target the hardcore music fan with a Spotify subscription and a big iTunes library, but the millions and millions of casual listeners — people who tune into Pandora but would love to listen to entire albums every now and then as well. People in their thirties and older who haven’t significantly changed their taste in music since college. People who haven’t been buying a whole lot of music in recent years.
There are a lot of those folks out there — a lot more of them, arguably, than heavy music buyers — and those casual listeners couldn’t care less whether a single new track is exclusively on one service or another. What they are interested in is rediscovering the classics, and listening to them on their own terms. In other words: binging.
Of course, that’s what every subscription music service offers, but unlike others, Amazon isn’t charging $10 a month for it, or subjecting users to ads, while still offering full on-demand access. Which is why its focus on inexpensive access to archives may be a lot more successful than spending a lot of money on a handful of exclusives here and there.