New Developments in Licensing Music

Out of the Midem Confernce in Cannes, France, come two developments… or news of progress on two developments…regarding music, piracy, and licensing royalties. Greg Sandoval writes in CNET that Spotify is one step closer to entering  the U.S., having signed an agreements with Sony Music Entertainment.  When Spotify will feel it has reached critical mass is difficult to say, but SONY owns 27.4% of the marketshare, according to Nielsen Soundscan.

Launched in late 2008, and currently developing a major presence in the UK and across Europe, Spotify is a music download company with a new business model, boasting the ability to offer music fans a “legal and superior quality user alternative to music piracy.”  Their revenue sources are advertising (when users opt for the free service) and an ad-free, paid subscription model (at approximately $8 a month).

And Omnifone, an independent provider of cloud-based, unlimited music services announced a deal with German collection society GEMA to license the “first legitimate global subscription service” for music in Germany. Omnifone and GEMA agreed licensing for Sony's cloud based music service "Music Unlimited powered by Qriocity" which launches in Germany this weekend on Sony's range of network connected BRAVIA® TVs, Blu-ray Disc™ players, Blu-ray Disc Home Theater systems, PlayStation®3 computer entertainment systems as well as VAIO and other personal computers.

Business valuation analysts know the value of recurring revenue streams, and these new efforts to (legally) offer music by subscription bear watching.