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Business News Digital
Micropayments key to streaming future, says Psonar boss
By Andy Malt | Published on Monday 10 June 2013
With many music rights owners and record industry commentators increasingly convinced that stream-based services – so ‘access’ instead of ‘ownership’ to use terms fashionable a few years back – will contribute a significant and possibly the majority of revenues in the future, the boss of one digital music company, Psonar, is again bigging up his firm’s alternative approach to monetising streaming content.
In the main, streaming services are either subscription-based (£5-£10 per month) or ad-funded, the latter only really working as a standalone business (rather than as a way of up-selling subscriptions) if a userbase is huge, as with YouTube and VEVO. But since early 2011, UK-based Psnoar has been dabbling with a pay-as-you-go system, where users pay a tiny sum every time they stream a track.
Convinced that system, despite having yet to gain momentum, will still play an important role in the future, Martin Rigby, CEO and co-founder of Psonar, told CMU: “The vast majority (something like 93%) of the world’s population have no access to debit or credit cards so micropayments via mobile are the obvious way to pay for many digital goods and services (and even some physical ones) online. This also applies to a sizeable minority of consumers in the developed world. In the way that pre-pay revolutionised access to mobile, micropayments can revolutionise access to online products and services”.
He continued: “Subscription streaming is a great product for relatively wealthy music fans who want to listen to 60 hours music or more on a subscription service. At £120/$120 per year this is unaffordable for the majority of people worldwide, both in the developed and developing worlds. Moreover, for people with large personal music collections, which they listen to most of the time with only occasional recourse to on-demand streaming, subscription represents very poor value compared to a pay-as-you-go payment model”.
Psonar uses a system where users charge up their accounts with as much credit as they want, starting at a minimum of 50p, and then pay 1p for each track played. Users can also gift track plays to non-Psonar users.
The advantages of micropayments over the subscription model, says Rigby, is that “whilst the service requires some scale to become profitable, it isn’t giving away more than a limited number of introductory tracks to acquire users and, generally, every play is monetised”. He adds: “Moreover, it has the capacity to bring on-demand streaming to the vast majority of the world’s population, especially on mobile, who can’t afford, or don’t want to pay for subscription streaming”.
It seems unlikely that any of the bigger players in streaming have any ambitions to move into micro-payments anytime soon, especially in North America and Europe. Though, every company in the streaming space – most of which are yet to fully demonstrate long-term sustainability – is eager for growth, both into the more mainstream consumer base, and emerging markets. And Rigby would presumably argue that that is where his approach could result in competitive advantage. Time will tell.
