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“Freemium” Streaming Generates Little Revenue, Industry Report Says

Largest services — SoundCloud, YouTube, and Spotify — are dominated by non-paying users

LOS ANGELES�Ad-supported, “freemium” music services from YouTube, SoundCloud, Spotify, and others are barely generating any revenue for the recorded music industry,

According to worldwide data released recently by the global music industry trade groupIFPI, the average revenue generated by an ad-supported, �freemium� streaming music fan is 72-cents per year. IFPI counts 900 million ad-supported, freemium users on services (like YouTube) a group that collectively contributes an estimated $634 million per year.

IFPI also reports revenue of $29.41 per paying streaming subscriber, per year.�Currently, Apple Music, Tidal, and Rhapsody remain paid-only, within a range of price points. �The largest services � SoundCloud, YouTube, and Spotify � are dominated by non-paying users, with YouTube and SoundCloud almost entirely free access.

�Sounds like a problem with a simple solution, but converting freemium to paid isn�t simple at all. �In the case of YouTube, most fans are resistant to paying anything, and accustomed to open, free access to any music video in the world. �And complicating the matter is that YouTube itself is heavily resistant to making users pay,� according to the same article. �Even worse for the industry is that YouTube doesn�t have to, thanks to DMCA takedown processes that allow users to continuously upload infringing content without penalty. �Over the years, YouTube has constructed a virtually self-contained copyright system, one that includes ContentID and rapid takedowns, but also generates paltry revenues overall.�