Pandora's CEO Brian McAndrews says that free on-demand music streaming is damaging the entire music industry, which is presumably targeted at services such as Spotify.
In an op-ed publication on Business Insider, McAndrews details the situation and offers solutions to this fatal trend.
He began with an anecdote about a music executive who paid a visit to a college classroom. The unnamed executive then asked how many listens to terrestrial radio, which is just called "radio" back in the day, and a couple of hands went up. Next, he asked how many listens to Internet radio, and almost every hand went up. When he asked how many listens to on-demand music, little or no hands went down, but when he asked how many pays for the music service, not one hand stayed up.
This anecdote supposedly illustrates the ongoing crisis that the music industry is faced with, and it's a pretty straightforward story, clearly making its point. However, that's not really what's happening.
Out of the 75 million users on Spotify, more than 20 million are paying subscribers. On top of that, Apple also just rolled out a paid music streaming service, and it was able to garner about 10 million people in half a year since it started. In other words, even though there's a ton of free music available, millions of people still opt to pay.
What McAndrews wants is that free access to on-demand music should be restricted, where the main culprits are YouTube and Spotify.
"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," McAndrews argues.
On the other hand, Apple Music co-founder David Pakman points out the reason why most people aren't opting for paid subscriptions. Before digital means emerged as the go-to medium for music, consumers spent an average of $48 for physical tapes, records or whatnot. Compared with streaming services today, consumers will have to spend an average of $120 a year.
To sum things up, McAndrews proposes that on-demand free music should be limited to "truly" trial, and Internet radio, which is Pandora's main service, should continue with ad-supported models. However, it's a pretty tall order to "banish the gray market," as the Pandora CEO puts it.
