Listeners need to perceive the value webcasters add to music streams to tolerate ads

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Issue Date: 
Feb 1 2013 - 1:30pm

From Issue:

Many have said that the Internet has taught a generation that music is free -- or at least, with little or no monetary value. One writer now suggests that the ad-buying community has learned the same lesson.

"The strongest headwind facing not only Pandora but the entire music business is the continued fall of the market price of recorded music, whether that price is paid by listeners or by advertisers," contributor Dan Mitchell writes in CNN Money. "No matter which type of delivery, the hard fact is that a growing segment of the audience no longer expects to pay for music, or at least expects to not pay much. Ad rates, particularly on the mobile platforms that people increasingly favor for streaming music, are in the basement."

Interesting, but advertisers aren't paying for music, they're paying for the attention of services' users. The value listeners get isn't just the music, but the curation and selection and discovery -- that is, the value that servcies like Pandora add. Mitchell explains that the ease with which people can access music for free (YouTube, file sharing) could make sitting through ads to listen too high an admission price. If ad rates stay low, services like Pandora need to run more ads, which will drive rates down further. 

Read more in Fortune's CNN Money here.

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Supports the ideas in IRFA, indirectly, in my opinion!

So... if the value of music and potential value to a music service has been driven down by increased availability of various free sources... then doesn't that suggest that the rates for royalties are much higher than they should be?

That's one factor that led me to shut down my 'hobby' stream... royalty payments alone were several times what my ad income was, and 'more ads' alone would not have solved it. If you can't increase income, you've gotta decrease cost. If you can't do that, it's a losing battle.

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