**Disclaimer : This is just postulation and idea sharing from a Microsoft enthusiast to other enthusiasts, it?s not some leaked rumor out of Redmond or anything like that**
(If you don?t want to read the whole piece, scroll down below the SWOT analysis).
Hear this proposition out, what is the current state of the music industry in the modern digital age? Beyond the piracy issues, we?re seeing a shift in how people consume their music. The growth trend is in digital downloads and streaming services while physical media (CD?s) have been on a steady decline for the past 10 years or so. Many big name artists signed to major labels sell most of their music on services like iTunes, Rhapsody, Google Play, Pandora, Spotify etc. and less and less to CD?s. The problem with this trend for the artists is that the aforementioned services and record labels take huge chunks of the revenue pie away. Taylor Swift is done with Spotify because Spotify pays her about .01 cent per play on Spotify by while Spotify profits about on average 20-30 cents per play, iTunes takes upwards of .70 cents per .99 cent track download and labels take anywhere from .05 -.15 cents on top of that leaving the artist with bits and crumbs of their own work?s profits (why you see concert ticket prices soaring).
This creates a huge opportunity for a company like Microsoft still working on changing their public perception of old while also opening the door to a brilliant marketing campaign for the entire MSFT ecosystem. Below I outline the plan included with a brief SWOT analysis as it would appear to Microsoft:
? Strengths: Stable and large revenue source firmly established in enterprise apps and services, large and established digital infrastructure capable of handling mass user and traffic growth. Allowing Microsoft a business model that competitors would struggle to match.
? Weaknesses: Low brand recognition of the Xbox Music service
? Opportunity: Lure established and aspiring artists to sell their music exclusively via XBM and pocket 100% of the download revenue that their own work creates, and open the door to wider adoption of the Xbox Music as app/service as another revenue source for MSFT as well as an ecosystem stepping stone.
? Threats: Major record labels who own millions of tracks worth in content could potentially see this as a major threat to their business models, could have a crippling ripple effect for services like Pandora and Spotify.
Here?s the premise to how this all would make sense, Microsoft makes an appeal to the growing number of musicians frustrated by the labels and streaming/downloading services leaching away at their revenue. Microsoft offers to allow artists to keep 100% of download/ad streaming revenue for their work if they agree to exclusively offer their music ONLY ON XBM. For thousands of artists this actually would mean an increase in annual revenue than if they had their music on multiple services paying them an average of 5-10% of per song download revenue. 1 million .99 cent song downloads on XBM at 100% would be a revenue equivalent to 10 million downloads on iTunes and would lop off the label?s gratuity. End result is drastically increased revenue for the actual artists.
Microsoft would finance and PROFIT off this venture via 3 primary ways:
1.) Xbox Music App becomes a one-time $2.99 app for download on IOS and Android. (Remains a free app preloaded on Windows Phone). iOS and Android users are charged $1.29 per track purchase while seeing that the Windows Phone/Windows 10 user price is always $0.99 cents per track. Windows devices also get access to new content 1 week before iOS and Android XBM users Streaming is $5.99/month and no commercial interruption for Windows Users, $5.99/month for iOS/Android with limited hourly commercial interruption, artists get the ad revenue for their channel. Artists could also market their concert tickets on the Xbox Music app/Windows store with Windows users seeing both discounts and earlier access to tickets.
2.) Artists agree to only use and be seen only with Windows Phone and other Microsoft products while employed under Microsoft, in return for Microsoft allowing them 100% download and streaming ad revenue for their songs on Xbox Music. Making XBM the largest marketing body for the MSFT ecosystem to a wide and diverse young demographic without raising the marketing budget.
3.) In theory would spurn a spike in Windows Phone/Windows/Xbox One adoption among the 15-30 demographic by offering more attractive incentives for adoption and increase the profitability of Lumia and Surface and afford Xbox One more competitive advantage over PlayStation4, increasing revenue and profitability of all 3 Microsoft hardware divisions, as well as push the integration and reach of Microsoft?s cloud service to a larger audience including iOS and Android users (Nadella?s goal).
Conclusion: This becomes a 2 in 1 venture/marketing tool for Microsoft, creates another MSFT app millions of iOS and Android users would want to download for access to their favorite artists who then would see all the added benefits Windows Phone and Tablet users get for being on the MSFT platform. Artists with huge followings would self-market their music (like before) via social media and tell millions what app to download to get access to their songs and tickets. These MSFT employed artists would also be constantly seen using WP?s, Surfaces etc. etc. and add more cool factor to the brands, as well as change the perception that Windows is only for boring cubicle work.
(If you don?t want to read the whole piece, scroll down below the SWOT analysis).
Hear this proposition out, what is the current state of the music industry in the modern digital age? Beyond the piracy issues, we?re seeing a shift in how people consume their music. The growth trend is in digital downloads and streaming services while physical media (CD?s) have been on a steady decline for the past 10 years or so. Many big name artists signed to major labels sell most of their music on services like iTunes, Rhapsody, Google Play, Pandora, Spotify etc. and less and less to CD?s. The problem with this trend for the artists is that the aforementioned services and record labels take huge chunks of the revenue pie away. Taylor Swift is done with Spotify because Spotify pays her about .01 cent per play on Spotify by while Spotify profits about on average 20-30 cents per play, iTunes takes upwards of .70 cents per .99 cent track download and labels take anywhere from .05 -.15 cents on top of that leaving the artist with bits and crumbs of their own work?s profits (why you see concert ticket prices soaring).
This creates a huge opportunity for a company like Microsoft still working on changing their public perception of old while also opening the door to a brilliant marketing campaign for the entire MSFT ecosystem. Below I outline the plan included with a brief SWOT analysis as it would appear to Microsoft:
? Strengths: Stable and large revenue source firmly established in enterprise apps and services, large and established digital infrastructure capable of handling mass user and traffic growth. Allowing Microsoft a business model that competitors would struggle to match.
? Weaknesses: Low brand recognition of the Xbox Music service
? Opportunity: Lure established and aspiring artists to sell their music exclusively via XBM and pocket 100% of the download revenue that their own work creates, and open the door to wider adoption of the Xbox Music as app/service as another revenue source for MSFT as well as an ecosystem stepping stone.
? Threats: Major record labels who own millions of tracks worth in content could potentially see this as a major threat to their business models, could have a crippling ripple effect for services like Pandora and Spotify.
Here?s the premise to how this all would make sense, Microsoft makes an appeal to the growing number of musicians frustrated by the labels and streaming/downloading services leaching away at their revenue. Microsoft offers to allow artists to keep 100% of download/ad streaming revenue for their work if they agree to exclusively offer their music ONLY ON XBM. For thousands of artists this actually would mean an increase in annual revenue than if they had their music on multiple services paying them an average of 5-10% of per song download revenue. 1 million .99 cent song downloads on XBM at 100% would be a revenue equivalent to 10 million downloads on iTunes and would lop off the label?s gratuity. End result is drastically increased revenue for the actual artists.
Microsoft would finance and PROFIT off this venture via 3 primary ways:
1.) Xbox Music App becomes a one-time $2.99 app for download on IOS and Android. (Remains a free app preloaded on Windows Phone). iOS and Android users are charged $1.29 per track purchase while seeing that the Windows Phone/Windows 10 user price is always $0.99 cents per track. Windows devices also get access to new content 1 week before iOS and Android XBM users Streaming is $5.99/month and no commercial interruption for Windows Users, $5.99/month for iOS/Android with limited hourly commercial interruption, artists get the ad revenue for their channel. Artists could also market their concert tickets on the Xbox Music app/Windows store with Windows users seeing both discounts and earlier access to tickets.
2.) Artists agree to only use and be seen only with Windows Phone and other Microsoft products while employed under Microsoft, in return for Microsoft allowing them 100% download and streaming ad revenue for their songs on Xbox Music. Making XBM the largest marketing body for the MSFT ecosystem to a wide and diverse young demographic without raising the marketing budget.
3.) In theory would spurn a spike in Windows Phone/Windows/Xbox One adoption among the 15-30 demographic by offering more attractive incentives for adoption and increase the profitability of Lumia and Surface and afford Xbox One more competitive advantage over PlayStation4, increasing revenue and profitability of all 3 Microsoft hardware divisions, as well as push the integration and reach of Microsoft?s cloud service to a larger audience including iOS and Android users (Nadella?s goal).
Conclusion: This becomes a 2 in 1 venture/marketing tool for Microsoft, creates another MSFT app millions of iOS and Android users would want to download for access to their favorite artists who then would see all the added benefits Windows Phone and Tablet users get for being on the MSFT platform. Artists with huge followings would self-market their music (like before) via social media and tell millions what app to download to get access to their songs and tickets. These MSFT employed artists would also be constantly seen using WP?s, Surfaces etc. etc. and add more cool factor to the brands, as well as change the perception that Windows is only for boring cubicle work.
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