The Hidden Challenges of Subscription Music
March 10, 2011
Kyle Bylin in Streaming, spotify, subscription

Nearly a decade ago, Rhapsody debuted its subscription music service.

Giving fans access to unlimited music for a monthly fee appeared to be the answer to the social epidemic of file-sharing that occurred, and yet they still seem indifferent towards it.

Rhapsody failed to break into the mainstream market, leaving critics to question if it ever will. Many companies including MOG, Rdio, Slacker, and Spotify have since entered the sector too, none of which have had better luck. While Apple’s iPhone gave services a second life, experts argue that they have failed to reach critical mass due to issues of consumer awareness, user retention, smartphone penetration, and software design.

The main problems that subscription services face though are much, much larger.

As I argued previously, subscription music remains a niche product and in company efforts to appeal to casual music fans, they may grow alienated and be turned away.

Logic tells us that casual fans do not want to use apps that ask too much of them. Yet in lowering the amount of effort that users must exert in order to build collections companies run the risk of taking away the opportunities for personalization and customization that are essential to users forming a lasting connection to their music. In this essay, we are going to expand on this theory and explore why free-trials are too short, what service features are essential to converting free users into subscribers, and the importance of preserving the cognitive benefits of music ownership. Let us start by looking at why trials are too short.

I. Why Free-Trials Are Too Short

Upon discovering a subscription service, users are asked if they would like to partake in a free-trial. This is intended to help them determine if they like the service and are willing to pay for it. At fourteen days, MOG currently offers the longest trial. But is this enough time?

For core music fans, looking to experiment with the service, this window of time should suffice. However, for casual fans, there is reason to believe that they need more time.

Core fans are more likely to have music collections already built and are looking to try out features, browse through the selection, and experiment with the discovery tools. Casual fans, conversely, do not have the same knowledgebase and collection. They need to form a long-lasting attachment to the music that they acquire while using a service. Otherwise, once their free-trial expires, they may not see the value in becoming a full-on subscriber.

Recent studies in behavioral economics, however, suggest there are processes through which perceived value can be heightened. The more effort that a user exerts, the fonder they become of their music collections. Therefore, they value them higher. Likewise, once a user takes ownership of the songs that they discovered while using a service, they will see them as worth more and the cost of losing access to them will feel much greater.

At present, the brief free-trial periods that are offered by subscription services do not give casual fans enough time to develop an attachment and take ownership of their music.

Here is why trials must be extended:

Labor Leads To Love. When fans use a subscription service, their labor is what leads to love. The more actively involved they are in favoriting songs, creating playlists, and fine-tuning the radio stations, the greater they will value them. In a fourteen-day window, it is much harder for a user to harvest the fruits of their labor and begin to see their music collection grow. Fewer in-depth listening sessions will be utilized, which means that less opportunities for customization, personalization, and attachment will be realized. Because of this, users will not reap the cognitive benefits of the IKEA Effect, which is a psychological bias that leads us to overvalue the things we have worked hard to obtain. If the right amount of time investment is asked of a user, they will regard a subscription – the cost of maintaining access to their music – as a more worthy expense.

Pride in Ownership. The more work users put into a service, the more ownership they will begin to feel for it. Once they start acquiring songs and building playlists, slowly but surely, they will develop an attachment to them and perceive them as more valuable.

Sometimes, users claim ownership over their cloud-based collections before they have paid for the pleasure. As the emotions of ownership come welling up, the loss of their songs starts to feel more painful than spending the few dollars required to keep them. 

Users rationalize the added expense and conclude that the loss of their collection would be too much to bear. In general, users fail to appreciate how their perspectives will shift once they start viewing the music – as theirs – and consequently start viewing losing it as a loss. They thought they were only trying the service out for fourteen-days, but in fact, they are becoming owners of the music and are unaware of the emotions that it can ignite in them. Of course, the problem is that, for most users, a free-trial won’t have this effect.

As nonowners, they will still be able to put some distance between themselves and the music of interest and thus, will view it with less loving eyes and part ways with it easier.

Real Value Delayed. Unless a user spends lots of time upfront, it will be difficult for them to see the potential of a subscription service. The real value and fun is after a user builds a few extensive playlists, as well as, when the recommendation engine really gets to know them. Once they have experienced the flexibility and customization, they will be more attuned to the possibilities. But without an extended trial, users will be less likely to create playlists and enjoy their unlimited and personalized nature. It takes time for the recommendation engine to learn a user’s unique taste and make good suggestions.

With trials as limited as they are, casual fans never experience the potential of a service.

Thresholds May Vary. Many people have collections – small and big. Some own only a few CDs. Others have obtained hundreds. However, even smalltime collectors can be instilled with a sense of pride of ownership if they have crossed a threshold and achieved a degree of completion that satisfies them. A person may own every Metallica album, and nothing else, but still take pride in owning them. When a user is testing out a service, if they do not reach a personal milestone – a designated amount of music – they may not see any value in paying to access it. If they have not collected enough songs, created enough playlists, or felt the experience of having a personalized song suggested to them, they will not view the music on the service as their own. In turn, the cognitive benefits of pride in ownership will not be bestowed upon them. Since core fans are more likely to have collections of their own, it is the casual users that will need the extra time to build collections and fourteen-days will not provide enough chances to become proud owners.

Due to these arguments, it is apparent that free-trials in subscription services are too short. Even Netflix gives new users a whole month to test out their offering. For casual fans, a similar, if not longer duration of time is required for their labor to lead to love; for them take pride in music ownership; to see the potential of a subscription service; and cross a threshold that will cause them to overvalue the collection that they have built.

Unfortunately, asking the major labels to allow subscription services to offer extended trials of their music streaming is wishful thinking at best. They are weary of giving users free music and would not grant services leniency on the royalty fees they would accrue.

For services, lengthening trials is cost prohibitive; they already pay huge overheads. It makes more sense for them to spend that money enhancing their user experience and marketing their product. So they do. If they had leniency from labels or the money to burn, they might consider extending their free-trials. But as it stands now, offering a fourteen-day free trial to new users is the best they can do. Doing otherwise would be financial suicide.

Yet, despite these dilemmas, companies like Slacker are making it so it is are not reliant on free-trials of its service. And along the way, they may convert its users into owners too.

II. Five Things Slacker Gets Right

In a few months, Slacker will release an on-demand version of its music service.

What makes this compelling is that it is the first time a company has leveraged premium radio to market paid subscriptions. For several years now, the company has rivaled with Pandora in the web radio sector. By introducing an on-demand service, Slacker will now directly compete with MOG, Rdio, and Spotify too. There is, however, a crucial difference in how they will attempt to attract and convert users. Unlike those companies, Slacker offers a free and paid radio service. They also have an existing user base. Rival services rely on free-trials to draw in users and convince them to pay for their service. Once that period expires, users are prompted to subscribe or cease use. Slacker, on the other hand, can utilize their free radio service to market their on-demand service. Existing users of their radio app can try out on-demand and once their trial ends – if they decide that on-demand isn’t for them – they can keep using the radio app and will remain in Slacker’s system.

Due to licensing costs, other companies can’t afford to provide users with a free version of their service. Slacker’s competitors also face the challenge of growing their user base from scratch, whereas they’ve already gained a dedicated following with their radio app.

Therefore, the costs that Slacker will incur in marketing their on-demand service will be much lower initially because they can target their existing users and expand outward. So too, Slacker also has billing relationships with hundreds of thousands of users and many mobile carriers. If users try out the on-demand and like it, they can upgrade in a few clicks.

This is what makes Slacker an outlier. Spotify may be hyped more in the media, but it is Slacker that might actually have the killer app. To be clear, Slacker’s competitors have fantastic services and get many things right, but just not as many. Here’s an overview: 

1) Gradual Attachment. As a user listens to music via Slacker’s free radio and starts favoriting songs, each of them will be added their library. Casual fans may only use the service for an hour or two a day. In that time, they may only favorite a handful of songs.

Once a few months goes by that handful of songs can evolve into a few hundred.

The music starts to add up; the effort that a user has exerted becomes realized. As well, interest in harvesting the fruit of their labor grows. In working to collect these songs, a user gradually grows attached to them. This causes them to place a higher value on the music. Once the recommendation engine warms up, it suggests more songs the user likes and they start piling up. The user crosses their threshold and feelings of ownership start welling up. The value that Slacker provides becomes clearer. The problem that rival services face is that their business model does not allow gradual attachment to occur.

Their free trials are too short. And due to costs, they are forced to turn users away once the trial period ends. Slacker is not. It provides users with the space needed to collect music and grow attached to it. Through a blend of effort and ownership, their perceived value is heightened and the music is viewed with loving eyes. Only Spotify competes with Slacker here. However, Slacker provides users with another element that rival services do not.

2) Room to Grow. The greatest flaw that rival services share: their services are all or nothing. Either a user desires to stream millions of songs and pay a monthly free or they do not. It is that simple. On Slacker, users can access the free radio app or choose to pay to use the premium radio or on-demand service. They have room to grow. Users can start off with the free radio app and work their way up to on-demand once they realize its value.

Because of this, the Slacker can align itself with a broader range of fans and their needs; it can satisfy both casual and core fans. This wider appeal is apparent elsewhere too.

3) Shallow and Deep. The challenge that subscription services encounter is that their initial offering grabs the interest of core fans while casual ones find it irrelevant. Being able to stream songs and collect them in the thousands pulls in core fans. They desire tools and settings that allow them tweak a musical experience to their heart’s content.

Casual fans do not care. Services that cater to core fans too heavily turn them away. The amount of effort asked of them is too high. Yet if not enough labor is required of core fans they will not be happy either. So there is this balance of effortlessness and investment services must achieve. Of all the subscription services, Slacker may be closer than any other in cracking this delicate equilibrium. In their app, they have shallow controls on the top, just enough for the casual user to manage. At the click of a button though, it also has advanced settings that allow users to fine-tune their experience. It is not a perfect balance, but Slacker appears to be the closest of any service. Casual fans are given a simple and easy to use interface, and below it, core fans are given advanced tools and settings too.

This dual appeal, having both shallow and deep tools, is essential to Slacker’s allure; it enables them to evolve more closely to the needs and personal identities of their users.

4) Personalization. The most profound potential of Slacker lies in its ability to adapt to users and reflect their taste. From the start, the listening sessions may feel generic and tuned to fit the needs of everyone – similar to traditional radio. As a user invests time into the service though, it becomes their own. The stations are seeded with songs selected by professional, on-staff DJs, but if a user decides that they do not like a song – no matter how popular it might be – it never gets played again on that station. If a user favorites a song, it receives further rotation. Rival services do not provide their users with as many opportunities for customization, personalization, and attachment. They are simply not as adaptive as Slacker is. The consequence of this is that users may not as readily take ownership of their music and experience a heightening of perceived value. These two elements are important to subscription services as they help users rationalize the added monthly expense. Unfortunately, the battle does not end here. In time, users will habituate to a subscription service and their positive delusions will fade. Humans are, by nature, an ungrateful bunch. What pleases us today may bore us tomorrow. Music is no exception.

5) Hedonic Interruptions. When a user first signs up for a subscription service, they are excited. All of the music they ever wanted is at their fingertips. Enthusiastically, they save artists to their profile, create playlists, and tinker with discovery tools. This process makes them very happy, but they fail to realize how short-lived this happiness will be.

Just as soon as users become proud owners and faithful subscribers, they grow bored too. They start to struggle to come up with new artists to listen to. Playlists feel stale and boring. And they begin listening to the same albums all of the time. While users were happy to pay the monthly fee to gain access to their collections and listen to millions of songs initially, shortly thereafter, if nothing is done to respark their interest, owners turn into renters again, and the expense they incur feels much greater. Psychologists refer to this as the Hedonic Treadmill. The initial joy of acquiring a new object fades overtime as users become accustomed to using it every day. Subscriptions suffer the same fate.

Research has shown, however, that if interruptions occur, people will be less likely to adapt to an experience. In other words, if users are prompted with new music, playlists, and stations to explore often enough, it will help disrupt the process of habituation. Yes, all services gain new music regularly, but since Slacker believes in the power of radio, it is well-positioned to provide hedonic interruptions and prevent their users from growing complacent. By design, radio gradually exposes listeners to new music, but it does not alienate them. Slacker’s professional programming helps them fight habituation and regain user interest. All services have new music, but Slacker may have the best mix.

III. The Mainstream Cloud

After reading such accolades, it is tempting to challenge, so what? None of what Slacker offers is that spectacular, which is the point. Slacker’s on-demand service does not have to be; it just has to find the delicate trade-off between effortlessness and investment.

Thus far, cloud-based music services have been unable to crossover into the mainstream market. Slacker may be one of the few services that will not have to compromise their user experience in order to interest to the mass-consumer. The great paradox of cloud-based music services is that in their attempts to attract casual fans they may take the effort out of music. In turn, users lose out on the cognitive benefits that effort and ownership provide.

As we have learned, labor is what leads to love and everyone has a different threshold they must cross before they are willing to take ownership of music. Once users become owners, their sense of value is heightened. And lastly, it takes time for the real value of a music subscription to be revealed. All these reasons and more, are what makes Slacker an outlier in 2011. It is the right product offering at the right time. The company could be one of the factors, including Spotify, that help forge the adoption of the mainstream cloud and trigger the much-anticipated shift from ownership to access in music consumption.

To date, the skepticism that surrounds this transition has focused on the viability of the business models and the probability of fans embracing access over ownership. Rarely has anyone challenged the implications mainstream cloud itself and how it will alter our relationship to music. The converted, i.e. the utopians, will tell you unlimited access to music is pure ecstasy. For any cultural shift of this magnitude though, there is always a downside. Something along the way – no matter how subtle or seemingly insignificant – will be lost. At this point, we do not know what that will be, but it is safe to say ownership and effort will be further diluted, and if so, the devaluation of music will be accelerated.

Wrongly, the major labels claim that the pricing and abundance of choice given to users will devalue music. That is only half the story. It is when subscription services increasingly pursue evermore easy to use and effortless features in order to appeal to casual fans that music will be devalued. Once the entire history of recorded music is one-click away and a customized radio station can be created with another, that is when the real devaluation of music will become apparent and behind all the delight something significant will be lost.

IV. Benefits without the Burden

By now, you are probably thinking that notion of users owning music and exerting effort to get it is a lovely, but antiquated ideology. This argument is not lost on me. The young and the digital have never owned music in a tangible form nor have they exerted effort to get it. 

To them, there is no difference between a download and a stream. Music is music.

Thus, it would seem as if I am romanticizing the joys and processes of analog culture without addressing the fact that we live in digital world. These are fair criticisms, which is why this moment matters. In our race to achieve the upmost convenience in our lives, we have embraced technologies without questioning how they may change our relationship to music. Slowly, the barriers to collecting music fell, and each of us became a collector. 

In the digital age, subscription music services are leading the charge towards taking the burden out of music ownership. The great paradox is that we are creating an effort free paradise of music, and yet the quality of our music and how much enjoyment we derive from it may actually depend upon effort. The question we must ask ourselves now is this:

Can the burden of music ownership be removed without damaging the benefits?

Let’s hope so. Music has always imposed a burden on people. Digital music alleviated many; it costs less, takes up less space, requires less energy, and time. Subscription services seek to further lessen the burden of music ownership and in doing so they risk removing the cognitive benefits that it provides. If neither effort nor ownership is present in subscription services, they risk further devaluing music and diminishing user enjoyment. 

To be clear, I am not arguing that we must return to the pre-digital era – that somehow the devaluation of music can be stalled. Nor am I saying users can somehow be tricked into becoming collectors and perceiving music at a higher value. There is no magical formula for subscription music. Rather, I’m contending that we need to be mindful of the future we are creating for ourselves and the music we love. Our actions have consequences. Not everyone wants to own music. Not everyone wants to bother with effort either. That is fine.

However, only by engaging with these questions can we differentiate between the future we intend to create, and the one that the technologies we are using intend to create for us.

Never forget: Music quality is not only determined by bit rate. Our effort determines it too.

Article originally appeared on Music Think Tank (https://www.musicthinktank.com/).
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