Everybody listens to music, and we all have a preference of where we want to stream it. If you were to ask all your friends which service they most prefer, you’d most likely end up with any of these answers: Spotify, Apple Music, or SoundCloud. Music streaming is one of the fastest growing markets, currently accounting for 47% of music sales. This makes it a very lucrative market, yet it is very difficult to enter. Spotify alone has almost 150 million users, while Apple Music has a modest 50 million. Such large user bases for several companies make it hard for another player to enter the game, which is a big part of oligopolies. Unlike monopolies that only have a single company and a single product that the entire consumer base must use, oligopolies give these consumers options and cover a wider opportunity range. Newer companies try to compete for a spot in this market by trying to give consumers something they can’t get with their regular streaming service. For example, Tidal, the Jay-Z owned streaming service, offered exclusive access to highly anticipated albums for both Kanye West and Beyonce months before they were released globally. However, having promotions like these and trying to separate themselves from the other companies doesn’t always work. As of 2017, Tidal has only 3 million subscribers. This is an example of how a handful of companies have dominated a growing industry, and despite offering something different, it’s very hard for new companies to join the ranks.
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I enjoyed this post because I can relate to it. Being a person who loves music, I am constantly using the platforms you mentioned in your post. I think your example of the company Tidal is important. It shows how hard it is for smaller companies to compete with the bigger companies apart of an oligopoly. Although I have heard of Tidal, I have never used it due to services I frequently use such as Apple Music and Soundcloud. The oligopoly in the music industry is very similar to the video streaming industry. We see companies such as Netflix, Hulu, and Amazon Prime dominating, with hardly any competition due to the oligopoly.
ReplyDeleteI think that the other issue with Tidal is that it wasn't able to differentiate itself in terms of the pricing models it offered. The other three services offer free versions of their product that offer a lot of features, which increases the availability of the product and thus the probability that someone would upgrade to a premium version. Tidal only offers paid versions of their product without a clear reason why the service is so much better than something like Spotify or Soundcloud. Personally, the reason why I use Spotify and have Spotify Premium is that I really liked the features that I had when I used the free version and wanted access to some of the unique features, like offline listening.
ReplyDeleteI think that the music industry is an interesting topic for oligopolies since while it may seem very diverse due to a large number of artists, it run by a few distribution companies that ended up with an oligopoly on the market. It's interesting to me, like with your example of Tidal, how smaller companies that may offer some things that the larger companies don't still end up with a much smaller market share. But one thing I'm still curious about after reading this is how did the main streaming services come to having the position of an oligopoly in the first place and keep other streaming services down?
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