The following is an interview with ONErpm founder and CEO Emmanuel Zunz, one of the most bullish executives on streaming music’s growth potential. Zunz is all blue sky, though he’s also backing his enthusiasm with free streaming distribution for all artists, a huge move that’s part of a broader, walk-the-walk approach to digital music distribution. We’ve just brought on ONErpm as a sponsoring partner, and think you’re going to hear a lot more noise from these guys in the coming months and years.
Digital Music News: Add up all the on-demand streaming music platforms, and you have roughly 50 million paying subscribers at the midpoint of 2016. What’s the tipping point that sends this to… [gasp] 500 million?
Emmanuel Zunz: I can’t guarantee that this will happen, but I’ll certainly project it. And the reason is that new business models take time initially to ramp up. Usually what you then see is an inflection point, following by a new surge in all-of-a-sudden growth. That inflection point is that watershed moment, it’s the same thing.
DMN: Isn’t growth in premium streaming music pretty high right now? Spotify is surging past 30 million paying subscribers; Apple is taking on a million paying subscribers a month and recently crossed the 15 million mark.
Zunz: Currently, the growth curve for streaming is high among consumers, but in terms of payments and revenue, the growth rates are still pretty flat. But at some point, when people start getting really comfortable with streaming, behaviors will begin to change. That’s your watershed moment, one that will probably occur in about two years. We’ll start experiencing exponential growth.
DMN: Just two years?
Zunz: I think we’re getting closer all the time. When we get there, it’s hard to say exactly. You’ve just got to continue fighting the good fight. But this won’t happen if the industry doesn’t get behind streaming. We — all of us — have to play an active role to drive consumers towards streaming platforms.
DMN: Doesn’t sound like what’s happening at the moment.
Zunz: The impression I have now is that many are deciding that it’s Spotify or Apple that are responsible for figuring it all out. It’s ‘These are my rights, I need to be paid for my rights, this is my catalog and it’s up to you guys to figure out how to make a business out of it.’ And I don’t think that’s a productive attitude, I think we all need to be thought partners on how to make streaming successful.
“A lot of the artists I know are making a lot more money on streaming than they are from downloads. That’s already happening, and it’s very normal these days.”
DMN: But aren’t there serious concerns regarding royalty rates?
Zunz: It’s not that we don’t need to have a productive discussion on rates, or change the laws on how income on streaming music should be distributed. We’re dealing with old copyright laws, and I think those are healthy discussions, we need to keep in mind that without streaming, then we’re really screwed. So we have to play an active role in making this successful, and we can do that by having artists using their influence on their fans, and having them drive traffic using specific campaigns. As opposed to keeping streaming companies hostage and always trying to extract better rates. I understand we want to hold streaming services responsible, but we also need to help them get customers, and that’s by being a marketing or promotional partner with them.
DMN: So at 500 million paying subscribers, is that the point that artists start to experience a decent royalty rate?
Zunz: Frankly, I don’t know what a ‘decent royalty rate’ means. Is it the percentage that isn’t decent, or is it gross numbers that aren’t acceptable? A lot of the artists I know are making a lot more money on streaming than they are from downloads. The money they make per-download is clearly a lot higher than what they’re making per stream, but they’re still making more overall on streaming. That’s already happening, and it’s very normal these days.
So what I’m seeing right now is that we’re light years ahead of where we were two years ago, in terms of streaming monetization. And in two years, we’ll be even more light years ahead. So if the money is already not so bad right now, it’s going to be really good tomorrow.
And if you look at it, the payments are decent right now, there are just issues of who’s getting paid. If it’s the label, it’s what’s getting passed to the artist. But streaming is a very important source of revenue for a music company today, and it should be an important source of income to the artist. But it’s often down to how much a label is paying the artist.
So, I really don’t really understand or agree with the premise of the question.
DMN: Why shouldn’t an artist wait until the big subscriber numbers arrive? Why put up with bad royalties today?
Zunz: We really need to work together to build an industry. And no, artists shouldn’t wait until the big numbers arrive, I really don’t think we’re talking about bad numbers today, but we need to work together to change consumption habits. They need to show their fans the value of listening on streaming. And in order to change consumption habits from users, you need to have your content on the platform, and show the user the value of subscribing.
So it’s absolutely imperative that artists don’t wait, they have to be participants. We all have the responsibility and the power to transform the industry into what we want it to be. We should never sit out and wait. And it’s only through working internally that we can actually make change, it’s only through participating that we can make change, we have to make it happen, and by all of us taking a part is how we’re going to get to 500 million subscribers.
DMN: What happens to free streaming in all of this, either on YouTube or the on-demand audio side? Sony Entertainment executive Michael Lynton recently mentioned that free access may eventually be terminated, as soon as paid volumes reach critical mass.
Zunz: It’s not free, it’s ad-supported. And YouTube and on-demand services are very different in terms of how they treat ads. I don’t know if you’re going to get rid of ad-supported entirely, though I do feel strongly that having users sign up for ad-supported streaming is an essential part of the development of this industry. Will it go away? It might. But it would only go away if we have a good amount of paying subscribers.
Yes, Streaming Music Will Have 500 Million Paying Subscribers by 2019