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What You Get From Music Services That Charge More Than Spotify

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By now, most people understand what it means to pay $10 per month and get access to unlimited streaming music. Although streaming music has been around for less than two decades, over 50 million Americans subscribe to these services, and tens of millions more at least know what they are. We're entering a new phase of the market: new services are launching with new features for niche markets, and most of them cost more than $10 per month.

Primephonic, one of the new entrants, commissioned a market survey about user satisfaction with streaming music services; the results, released last month, showed that 60% of respondents expressed dissatisfaction about at least one aspect of the streaming service they use. How can music services improve satisfaction compared to mainstream services like Spotify and Apple Music? There are three major factors: audio quality, editorial, and metadata.

There are four basic criteria for audio quality: sampling rate and bit depth, codec, and bit rate of encoding. The first two of these represent the level of quality of the recording when it's mastered, before it is encoded for transmission to users. CDs are created at 44,100 samples per second (44.1 KHz) with each sample 16 bits deep.

The second two criteria represent how the resulting audio is encoded for transmission. Codecs, algorithms that compress digital audio, vary in sound quality and compression efficiency. A few different codecs are widely used; bit rates aren't comparable from one codec to another. Most major streaming services use a variant of the MPEG4-AAC (Advanced Audio Coding) codec; the big exception is Spotify, which uses a codec called Ogg Vorbis that costs nothing to use and requires a higher bit rate than AAC to get equivalent sound quality. Mainstream services typically max out at 320 kbps (kilobits per second) for use on Wi-Fi and offer lower bit rates for use on mobile networks.


As the table above shows, some of the new breed of services use CD-quality masters while others offer up to 384 KHz sampling rate and 24 bit samples, which is as good as anything coming out of a recording studio. All of these services use FLAC (Free Lossless Audio Codec) for transmission, which compresses the data but in a way that makes it possible to recover the original audio at full sound quality. FLAC can only be streamed over high-bandwidth Internet connections, such as residential broadband.

Tidal also uses a proprietary codec called Master Quality Authenticated (MQA). MQA sounds incredible on very high end audio equipment—such as from Meridian, the company that invented it—but unlike FLAC, it costs the services a license fee. Tidal maintains a limited (though growing) catalog of music encoded with MQA, which it calls Tidal Masters. Tidal Masters are available to Tidal HiFi subscribers at no additional cost. Until earlier this year, it was only possible to listen to these files using a desktop app or high-end audio equipment, but now there are Tidal Android and iOS apps that can play MQA-encoded music.

Tidal and Deezer began offering high-audio-quality services as higher-priced alternatives several years ago to help differentiate them from their much larger competitors. Both have made integration deals with high-fidelity home digital audio component makers, deals that the newer services are now starting to make.

IDAGIO and Primephonic focus exclusively on classical music. Both are based in Europe, Germany and the Netherlands respectively. Qobuz of France, which launched in the U.S. this past May, focuses on high sound quality across all genres; it currently offers a catalog of 185,000 albums for streaming. IDAGIO and Qobuz also offer $10/month services with standard quality audio (both MP3 codec at 320 kbps).

Qobuz also sells individual downloads at the highest possible sound quality and discounts their prices for Qobuz Studio subscribers. Another download service that offers ultra-high audio quality paid downloads is HDtracks, which has been around since 2008. Both Qobuz and HDtracks offer choices of codecs—including uncompressed WAV and AIFF for extreme purists who don't mind enormous files.

The second factor that differentiates these premium services from the mainstream services is metadata. Metadata is the information that can be used to search and browse music.

Mainstream music services generally depend entirely on the metadata that record labels and independent music aggregators feed them along with the audio itself. Standard label-supplied metadata usually includes only song titles, song artists, album titles, album artists, and year of release. Other information, such as composers, other musicians on each track, and years of recording are often not supplied.

Label-supplied metadata has limited value for search. The lack of metadata is especially an issue for classical. Classical music fans want to be able to search on composers and titles of works ("Mozart Haffner Symphony"); they also want to be able to search on artists ("Yo-Yo Ma") and conductors ("Michael Tilson Thomas") as well as specialized information such as catalog numbers for composers such as Mozart and Bach. Jazz fans also want to be able to search on artist names; for example, a jazz fan could be interested in tracks on which Herbie Hancock played piano, which includes a lot of recordings under other artists' names.

Searching for this type of information on mainstream music services is a frustrating experience. Yet even pop music fans are often interested in producers and guest artists, especially since today's pop hits often have guest artists. Record labels get around the lack of metadata by including guest artists' names in song titles or primary artist names ("Dark Horse ft. Juicy J," "Lil Nas X featuring Billy Ray Cyrus").

The only way for music services to improve searching and browsing is to add metadata manually. That's a ton of work, and it has to be done by skilled people. Primephonic has a staff of 10 musicologists and conservatory students who do this tedious work every day, in addition to related tasks such as rationalizing spelling ambiguities and fixing errors. IDAGIO initially hired 40 people over a period of two years to build its database. Its catalog includes 2 million licensed tracks of 160,000 compositions. Primephonic has 1.5 million tracks of 56,000 compositions. Those numbers are much smaller than the catalogs of the mainstream services. Of those, Apple Music is known for paying the most attention to metadata quality, but Primephonic and IDAGIO have search and browse capabilities that go well beyond the mainstream services for classical aficionados.

The last differentiating factor for premium services is editorial. Editorial includes homegrown playlists, recommendations, layout of genre and artist pages, and original content. Beats Music, a predecessor to Apple Music, was the first to offer large number of playlists created manually by experts. For example, editors at Down Beat magazine created dozens of jazz playlists, and editors at Rolling Stone provided an encyclopedic set of rock playlists. Most of the mainstream services now have combinations of automatically-generated playlists and human-curated ones; the former are geared towards individual users rather than musical genres, while the latter don't go particularly deeply into any single genre.

IDAGIO and Primephonic both have resources for editorial that are disproportionate to their audience sizes. IDAGIO is working with leading orchestras and music festivals to get exclusive music and editorial content. Primephonic offers recordings of exclusive commentary from composers, conductors, and artists, that complement music in its catalog. Qobuz features "digital booklets" with full liner notes that are designed to go with high-quality digital downloads but are available to top-tier subscribers.

The question for all these services is this: Which of the three ways to improve streaming music services will stay relevant over time?

Surely not superior audio quality. Apple has long taken the position that golden-eared audiophiles can't tell the difference between its mainstream level of audio quality (MPEG4-AAC codec at 256 kbps) and the original source material, as long as the recording artist uses its recommended set of mastering and encoding processes and tools, which it originally called Mastered for iTunes. Last week, Apple announced a successor to this program called Apple Digital Masters, which extends the encoding process to streaming on Apple Music.

One reason Apple is doing this is to head off Amazon's heavily rumored high-quality audio tier for its streaming service Amazon Music Unlimited, which is expected to launch by the end of this year at $15/month and to offer "better than CD quality." As home and even mobile Internet speeds keep increasing, it will no longer be necessary to constrain music bandwidth. It's easy to see that premium music services that charge more than $10/month but only offer enhanced audio quality won't be able to differentiate themselves much longer.

Editorial seems like the next to go. The major streaming services have enabled users to create and publish their own playlists for many years. They have been adding features and technologies to support discovery and recommendations voraciously since streaming started to take off in the early 2010s: custom radio, big data analytics, machine learning, recommendations based on time and place, and so on. The natural evolution of these products and services is that they eventually run out of scalable automated features to add, and they have to move on to features that require more investment and don't scale as easily—such as editorial.

For music services, that means people and content, and it means focusing on individual music genres. The mainstream services are already competing on human editorial and curation across multiple genres; this will only continue. If (for example) Spotify wants to beef up its classical editorial, it can simply buy either Primephonic or IDAGIO—just as it bought Echo Nest and Sonalytic for algorithmic recommendations and CrowdAlbum for photo and social media content.

Yet services often view editorial as a money pit with dubious return on investment. The most prominent example of this is exclusive music content; it's virtually impossible to acquire enough of it to generate competitive advantage. Apple, for example, has adopted a policy against exclusive music, though it does do "windowing," i.e. releasing certain music exclusively on Apple Music for a limited period of time.

Metadata seems like the only advantage that these niche services can preserve over mainstream services over a longer term. Metadata is gruntwork. Improving metadata quality across the board takes continuous significant investment in people and data infrastructure or it's not worth doing at all. It only makes sense in services geared towards niche markets with specialized metadata needs.

That describes classical—and, to a lesser extent, other genres such as jazz and world music. The metadata needs of classical music listeners are unique, and their musical world, in terms of catalog size, is an order of magnitude smaller than that of pop music. Classical seems like the biggest niche market where investments in metadata can translate into a loyal and satisfied audience.

The issue, of course, is that classical-focused services have to spend proportionately more money on metadata (and other features). So is there a big enough audience that's willing to pay more? IDAGIO commissioned Midia Research to find out. The Midia study, released three months ago, is optimistic about listenership. It claims that 35% of all adults worldwide listen to at least some classical music, about equal to country and more than R&B or hip-hop. On the other hand, it says that North American classical music revenue in 2018 was $146 million, which is only 1.4% of total music revenue. Streaming represents 61% of that revenue, which is lower than the overall industry figure of 75%.

That deficit is an opportunity for services that cater to classical fans. IDAGIO's CEO Till Janczukowicz explained that he founded the service to help prevent classical music from losing relevance in the digital age. Whether that's because mainstream music services don't offer inviting experiences for classical fans or because the demographic is too old is another question for another day. For now, it's clear that these services offer tangible benefits that the mainstream music services don't, and that they should continue to do so for a while.


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