Freemium has the Chris Anderson stamp of approval. But in the real world, music companies are realizing that freemium is too expensive and unsustainable, at least without serious constraints. It doesn't make economic sense, and worse, it feeds a consumer addiction to free—instead of whetting the appetite for premium.
This has become obvious, and the examples of freemiumexodus are now everywhere. Just this week, Paris-based streaming site Deezer drastically limited its free option, the latest company to smell the expensive coffee. Instead of Grooveshark-style, open-freebie access, Deezer now limits users to just 5 hours of free listening a month.
Want more? Then pay for it. But it turns out that music fans may be overly-accustomed to free stuff, and totally spoiled. As a result, it takes quite the whip-crack to move them over to paid.
Look no further than Pandora for proof of that. Despite all the success, this is a model that remains heavily attached to advertising-based, free access—and remains unprofitable (just check their latest financials). And in order to motivate and monetize, Pandora has turned its free side into Times Square. It's flashing ad interruptions, annoying overlays, and more-than-occassional technical hiccups. And it's non-stop.
And yet, Pandora can't get enough people to pay just $36 a year for ad-free premium! And here's the sad part: this sort of advertising volume-crank carries a serious risk of alienating consumers, many of whom will just as quickly march towards a less annoying—but free—radio service. Just wait for something hotter, and the cycle starts all over again.
And how about Spotify? Peek past the hype for one second, and kiboshers like Bronfman are onto something. Sure, Spotify has more than a million paying subscribers, they've replaced traditional radio for certain demographics, they're monstrous in Europe! But the other nine million are the problem! Artists are getting paid zilch, and labels are wondering where their bonanza is.
The result? Spotify is drastically curtailing the free-for-all. Just last month, Spotify chopped its freebie hours further, from 20 to 10 a month, while limiting the number of song repeats to 5. Is this still a good time for music fans?
Sure, you can argue that these are technically still freemium models. After all, there's still a free and a paid part. But in reality, this is something different from the freemium we know and love—it's more akin to a free sample of ice cream or one spin on the merry-go-round. It's not classic freemium, it's a taste with handcuffs.
Now, the question is whether these limited freebies can succeed, and generate large groups of paying, premium music fans. There are billions riding on that question.
This has become obvious, and the examples of freemiumexodus are now everywhere. Just this week, Paris-based streaming site Deezer drastically limited its free option, the latest company to smell the expensive coffee. Instead of Grooveshark-style, open-freebie access, Deezer now limits users to just 5 hours of free listening a month.
Want more? Then pay for it. But it turns out that music fans may be overly-accustomed to free stuff, and totally spoiled. As a result, it takes quite the whip-crack to move them over to paid.
Look no further than Pandora for proof of that. Despite all the success, this is a model that remains heavily attached to advertising-based, free access—and remains unprofitable (just check their latest financials). And in order to motivate and monetize, Pandora has turned its free side into Times Square. It's flashing ad interruptions, annoying overlays, and more-than-occassional technical hiccups. And it's non-stop.
And yet, Pandora can't get enough people to pay just $36 a year for ad-free premium! And here's the sad part: this sort of advertising volume-crank carries a serious risk of alienating consumers, many of whom will just as quickly march towards a less annoying—but free—radio service. Just wait for something hotter, and the cycle starts all over again.
And how about Spotify? Peek past the hype for one second, and kiboshers like Bronfman are onto something. Sure, Spotify has more than a million paying subscribers, they've replaced traditional radio for certain demographics, they're monstrous in Europe! But the other nine million are the problem! Artists are getting paid zilch, and labels are wondering where their bonanza is.
The result? Spotify is drastically curtailing the free-for-all. Just last month, Spotify chopped its freebie hours further, from 20 to 10 a month, while limiting the number of song repeats to 5. Is this still a good time for music fans?
Sure, you can argue that these are technically still freemium models. After all, there's still a free and a paid part. But in reality, this is something different from the freemium we know and love—it's more akin to a free sample of ice cream or one spin on the merry-go-round. It's not classic freemium, it's a taste with handcuffs.
Now, the question is whether these limited freebies can succeed, and generate large groups of paying, premium music fans. There are billions riding on that question.
