Playing Subscription-Powered Music

Over the last few decades, the music industry has progressed significantly. The days of having to purchase CDs, vinyl albums, or cassettes are gone long before. You no longer need to purchase digital downloads. These days, you just have to simply sign in to the music streaming services and the door to the world of music will be opened for you.

According to a poll conducted by the International Federation of the Phonographic Industry (IFPI), the global representative of the recorded music industry, the global music market has grown by 7.4% in 2020. Subscription-based business models are playing a major role in this.

Many people consider subscription-based billing as the standard method in renovating businesses. They provide predictable, recurring revenues and frequently create sufficient cash flow, which are the two compelling justifications in a downturn.

Spotify, one of the major key players in the music industry, acquired 138 millionactive monthly users in the last two years i.e., 2019 and 2020, alone. By the end of the year 2021, it expects to have more than 425 million monthly users.

The Musical Subscription Based Billing

To establish a music service based on a subscription business model, you just need three things in place:

1. A collection of music files packaged in the streamable format and saved on an internet-connected storage device;

2. A process to limit access to certain music files until the listener can demonstrate acceptable credentials (e.g., proof of payment); and

3. A system to accept payments (such as credit cards) on a periodic basis in exchange for the user getting the credentials specified in the 2nd point, allowing them to stream the music files mentioned in the 1st point.

However, adding a subscription billing management to music can only succeed if the additional advantages correspond with the fundamental value of the product.

The evolving landscape of the music subscriptions may be divided into four tiers, as shown in the diagram below:

artist centric diagram

More devoted fans are attracted to a certain artist via subscription pricing as it moves up the pyramid. Those at the bottom of the pyramid, on the other hand, draw considerably larger crowds but face customers with shorter attention span and listening habits.

Subscription-Based Business Models in Live Music

subscription based business models

By scheduling certain genres at iconic venues, several event organizers have developed a strong image for their firm. There are multiple music subscription models for:

●  Concert Promoters

Several concert planners have made their mark by booking certain genres of artists at renowned venues. Music lovers have become accustomed to and even look forward to this type of tailored programming.

●  Venues

Renowned venue owners might also want to think about using this strategy as well. Business logic and financial flows will necessitate some deliberation. Nonetheless, it’s not unusual for the venues to reap the benefits of ticket distribution for their commercial or culinary partners.

●  Festivals

Subscription-based billing models can also be explored by music events. According to some studies, the festival’s brand ranks close to the program as the top reason of attending. Due to the cancellation of most festivals of 2020, a subscription billing management can help to cover the cost of 2021 and deepen the relationship between devotees and the festival by providing unique benefits throughout the event duration.

●  Managers. Artists and Labels

Finally, managers, artists, and labels would have a better understanding of the subscription billing system. As more artists and companies embrace their own memberships and subscriptions, they are beginning to feel the similar way that previous music fan clubs did.

None could have predicted the recent move in the digital media towards paid subscriptions, which has been influenced by the popularity of Netflix and some popular publications. Consumers are becoming used to paying for digital material they used to get for free. More venture investors are interested in investing in subscription billing software and platforms.


  • Ajay Jain

    Ajay is the Director - Business Development at Magnaquest. He is looking at various domains including strategy, go-to-market, core marketing and product marketing. Ajay comes with a rich and varied experience of the semiconductor industry, education and startup consulting. He has an experience of over 16 years in both corporates and growth-stage startups. He has double Masters – MS from University of Arizona and MBA from Indian School of Business.