Will Twitter’s new #Music app boost the recording industry?
Twitter Inc. says its new music service helps users discover songs and artists.
But the music industry isn’t sure it’s something to sing about just yet.
The #Music app recommends songs based on the artists Twitter users follow. It also shows what tracks friends are tweeting about. And it lets users browse songs that are popular or up-and-coming on the service. The user can preview the tracks from iTunes or subscribe to Spotify or Rdio to listen to full-length versions of the suggested songs.
The highly anticipated service, which rolled out Thursday online and to iPhone users in the App Store, is part of the San Francisco company’s efforts to expand beyond chatter and photos into other media to broaden its appeal to its more than 200 million monthly users. Just like Facebook Inc. before it, Twitter launched its music service without striking deals directly with music companies. Instead, Twitter piggybacked on existing deals the recording labels have in place with subscription music services.
Twitter was already one of the Internet’s most popular spots for artists to reach their fans and get a following for their music. Eight of the top 10 most-followed people on Twitter are artists.
Getting big play on social media is crucial for the music industry. The first to be hard hit by the digital revolution, the industry is now relying on the Internet to help engineer its recovery.
Though physical sales still account for much of the industry’s global revenue, those numbers continue to fall. And in the U.S., more than half of the industry’s revenues last year came through digital channels: music downloads, subscription services and advertising revenue, according to the Recording Industry Assn. of America.
Global sales rose last year for the first time since 1999, when the launch of the Napster file-sharing service began to remake the industry. The increase — 0.3% — was tiny and the total revenue of $16.5 billion was nowhere near the $38 billion the industry claimed in its heyday. But the figures the International Federation of the Phonographic Industry released in February were the first encouraging signs of growth.
The growth in digital revenue has been fanned by services that let listeners choose from a vast library of music, instead of buying individual songs or downloads. Revenues are flowing in from subscription services such as Spotify, streaming radio services like Pandora and other offerings, such as YouTube and music video service Vevo, which are supported by advertising.
The explosion in smartphones — the third most popular device on which to listen to music, after personal computers and stereo systems — is also fueling the comeback. The ease of owning or streaming music legally has also begun to discourage piracy, although about a third of Internet users still frequent websites that peddle unlicensed music.
Last week, Twitter telegraphed to the world that it planned to get into the music recommendation business when it bought music recommendation and streaming service We Are Hunted, which shut down its operation. Twitter began by testing the service with celebrities such as Ryan Seacrest, Blake Shelton, Ne-Yo and Moby who praised it on Twitter. Wiz Khalifa last week tweeted: “Man this new Twitter music app is insane!”
“Twitter and music go great together. People share and discover new songs and albums every day. Many of the most-followed accounts on Twitter are musicians, and half of all users follow at least one musician,” Stephen Philips, founder of We Are Hunted, wrote in a Twitter blog post.
The new music service could help the industry capture musical trends and figure out what their fans are listening to — and what they are likely to listen to in the future.
Knowing how many users follow musicians, which musicians they follow and how many music links they click on could give the industry what Forrester Research analyst James McQuivey calls a “data trail.”
Twitter “should generate a lot of data about tastes, preferences, who is listening to what, when they listen, how long, frequency, etc.,” Wedbush Securities analyst Michael Pachter said.
Other subscription services are interested in partnering with Twitter as well, according to one industry observer who spoke on condition of anonymity.
Some analysts are skeptical that Twitter Music represents a major step forward for the music industry.
“The idea that just because it’s Twitter, it’s middle-America mainstream, that’s a little mistaken,” said Russ Crupnick, NPD Group’s senior vice president of industry analysis.
Twitter Music will have limited reach: Only 15% of U.S. households use the social network to communicate, Crupnick said. Fewer still have a Spotify account (5%) or have even heard of Rdio (2%).
Crupnick found that, although any new offering that helps to promote the industry ultimately is beneficial, the service sets up too many barriers — “hamster-wheel stuff” — that stand in the way of a music aficionado discovering new music or artists.
“It’s missing the boat for people who used to discover things on the radio but now are lost,” Crupnick said.
The bigger game changer, Crupnick said, would be if radio giant Clear Channel offered expanded playlists, introduced more new artists and more carefully curated its selections.
Analysts say the new service should benefit Twitter by increasing the amount of time users spend there so the company has more opportunities to show ads to users. Twitter is expected to more than double its advertising revenue this year to $583 million, from $283 million last year.
Twitter does not disclose its financial performance but is widely believed to be gearing up for an initial public stock offering this year or next. Chief Executive Dick Costolo has downplayed those expectations, saying the company has raised more than enough money to remain private for the foreseeable future.
