Business News Digital Labels & Publishers

Ministry chief lays into streaming and freemium at fiery Mobile World Congress debate

By Chris Cooke | Published on Wednesday 11 March 2015

It’s no secret that Ministry Of Sound more than most has been cautious – and at times outright critical – of the rise of the streaming services, and especially freemium platforms, questioning the motives of the streaming music companies and the rationale of their business models.

Of course, you might argue that that viewpoint is in no small part the result of Ministry’s original label business being dominated by compilations, with the superclub’s record company traditionally known more for curation than signing and nurturing new artists (though the latter element has grown over the years).

Digital has not been kind to the compilations business, and while some brands in the market did eventually find a way to make things work on iTunes, it’s much harder for compilation makers – who are curating tracks owned by other labels – to generate revenues on the streaming platforms, where thousands of bedroom curators – not to mention labels and media looking for exposure – are making playlists that arguably render compilations redundant.

And when those bedroom curators rip off the tracklists of your carefully planned compilations you end up in a very grey area of copyright law. Ministry, of course, sued Spotify on that issue, though subsequently settled, meaning we never got any judicial guidance on whether curated lists of songs have copyright protection.

But it’s interesting that, while Ministry boss Lohan Presencer has sometimes been out of kilter with other label bosses when dissing streaming services (and not just easy targets like Pandora and YouTube, all the streaming services), some of his opinions are now echoing around other record companies as concerns grow over the size of the freemium market, which generates a minority of streaming income.

And Presencer was back in diss mode at the recent Mobile World Congress in a fiery panel that partnered the Ministry boss with reps from Deezer and Rdio. As Music Ally reports, Presencer didn’t hold back, saying of the streaming execs to his side: “Your objective is to grow your user base, to tell a story such that you can IPO or you can sell, and you can exit, and you can put money back in the pockets of your investors”.

He went on: “You are not the ones who are investing in developing talent. You are not the ones who are signing artists. And our artists and investment – our creative community – is contracting daily, as a result of the free services that are out there and giving music away, with the objective of you achieving some sort of exit at the end”.

Later laying into the freemium services in particular – the domain where record industry opinion may be swinging in his direction – Presencer questioned the argument, put forward by Spotify et al, that freemium drives premium subscriptions, where the real future revenues lie. He said: “My beef continually over the last few years has been with the free aspect, the freemium model. I just can’t see how that is sustainable or supportable”.

He continued: “The argument goes that by making a free ad-funded service available, you capture – you give – the pirates an alternative. I just don’t buy it. I think what you do is you take casual consumers of music and you turn them from purchasers into noshers, into browsers, into snackers. They don’t have to engage in the subscription model. The reality of some of the bigger streaming services is that 75% of their user base are free, which has a horrific impact on the music industry and its ability to invest in talent going forward”.

Of course, while Presencer was keen to stress what a small role streaming revenues play in his label business, many other record companies now see the likes as Spotify as a key revenue generator, and might argue that it is because of Ministry’s resistance to streaming that it is yet to see the benefits. Though when it comes to freemium, even those labels that are big fans of Spotify, Deezer and Rdio might nod when the Ministry boss speaks.

Music Ally has a detailed summary of the panel here.