Michael Wolf: 'Gray Music' Set to Surpass Exclusive Streaming Tracks

By Hannah Karp 

Over the past year, music streaming services have been battling for subscribers by offering exclusive access to releases by big-name artists. Soon though, the content fight is likely to shift.

The music industry's new driver will be the fans and the lesser-known artists who create mixes, remixes, live recordings and cover songs -- content collectively known as "gray music" -- argues strategist Michael Wolf in a presentation at WSJDLive, The Wall Street Journal's global tech conference.

Music services such as Spotify AB, Apple Inc.'s Apple Music and rap star Jay Z's Tidal -- all of which charge about $10 a month for unlimited, on-demand music -- are helping the music industry attain its first significant growth in 17 years despite continuing declines in CD and download sales.

These subscription services, which counted fewer than 100 million paying subscribers globally as of last year, have only offered access to 30 million songs that they license from record labels.

Alphabet Inc.'s free YouTube site, by contrast, draws more than 1 billion monthly users world-wide with the aid of more than 120 million pieces of gray musical content. That is in addition to the standard 30 million songs it licenses from the big record labels, according to Activate Inc., Mr. Wolf's consulting firm.

In total, about 700 million people a month listen to such gray music. While paid-streaming services have so far largely avoided offering gray music due in part to the difficulty of identifying and compensating the artists who create it, such content "is likely to become an important differentiator between services," Activate estimates.

Exclusives won't drive subscription decisions for most consumers, Activate's research shows, in part because they usually last no more than a few weeks, after which record labels make them widely available.

Subscription streaming is also likely to get a boost from voice-activated speakers such as Amazon.com Inc.'s Echo, whose users can subscribe to the music service Amazon Music Unlimited for a discounted rate of $3.99 a month. Household penetration of smart speakers is expected to increase 10-fold over the next five years, Activate estimated.

Write to Hannah Karp at [e-mail]

(END) Dow Jones Newswires

October 25, 2016 19:27 ET (23:27 GMT)

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