Wednesday, November 5, 2014

Spotify Loses While Taylor Swift Gains

Aside from her musical talent, Taylor Swift could also be described as a marketing expert.  Faced with digital disruption in the music industry, she caused a disturbance in the streaming music industry that helped to drive her album sales.  Fans couldn't listen to her album without paying for it, so they opted to pay for it.  The result, 1.3 million album sales in the first week.  We can only expect for total album sales to go higher.

Certainly Spotify was not truly hurt by the loss of one artist.  The challenge will be that others will follow the Taylor Swift strategy of promotion, limited streaming availability, and other marketing tactics.  Access to current musical content could cause Spotify and others to remodel themselves to maintain subscription growth. 

By the way, Swift's album 1989 was the first album to top a million in its first week in 2014 and currently ranks as the "second-highest seller overall, behind the Frozen soundtrack." 

Dish Network Not Afraid To Drop Channels

Last month, Dish Network dropped most of the Turner Networks, the most notable being CNN, especially given this being an election year.  And while, they reported a small drop in subscribers for the third quarter, the belief was that the loss of Turner nets was not a big deal.  Rather, according to the Wall Street Journal article, "Subscriber growth has been hurt by quality-of-service issues, Dish said, including not meeting its own standards for installations, answering subscriber calls in an acceptable time frame, and equipment reliability. The company warned that these issues could affect revenue growth in the future."

Cost control is a driving factor in the cable game as consumers fight the high cost of cable television by dropping their service for OTT programming.  Dish recognizes the challenge of keeping their subscribers and limiting price hikes, especially those caused by higher license fees.  At the same time, Dish is focusing on the online market with possible plans to build out their own low priced video service.  That may be a hard business to pull off unless Dish can integrate its license fee deals for online content with its satellite deals to assure the best rate for license fees. 

Turner won't be their only problem.  The article reports that the CBS deal will also expire by year end.  Watching what happened to Time Warner Cable after its war with CBS, Dish may be more willing to negotiate with a broadcaster like CBS, then with a cable programmer like Turner.