Your Car Could Save the Music Industry

By Katie McCort of Rock Edition


In the past few weeks, Spotify has claimed their 10 millionth subscriber, Amazon has announced the upcoming release of their new streaming service, Google is rumored to be purchasing Songza, and Apple plans on revolutionizing how consumers listen to music once again with their recent acquisition of Beats. It is clear that digital transmissions are not the elusive future of music distribution anymore; they are the present.

Earlier this month, Sirius XM’s SVP of music licensing, George White, Google’s Sami Valkonen, and Colin Rushing from SoundExchange were among the few industry players speaking at the New Music Seminar’s panel on music streaming. While the panel discussed the new possibilities streaming and digital distribution could bring to the music market, the conversation ironically focused on this traditional, but iconic destination for new music discovery: your car.

The ostensibly eternal marriage between cars and music has become a link between generations; a cultural ritual practiced consistently among drivers since the radio found its way into the automobile in the 1930s. However, like all things, radio has been under pressure to innovate in order to meet consumer demand for easy and accessible music on the dashboard that also measures up to their eclectic tastes. Perhaps no business has done that better than the business of satellite radio who has remained as prominent among music consumers as they have among makers of automobiles.

In a one-on-one interview with the president of Sirius XM, Scott Greenstein, New Music Seminar founder, Tom Silverman, commented that the success of Sirius XM has a lot to do with the fact that satellite radio is the only new music service to come bundled with the automobile. “They made love to the car,” proclaims Silverman. Arguably, this something borrowed, something new business model has made Sirius XM a prime player in the market of music streaming. Colin Rushing, SVP and General Council for SoundExchange, notes that, “nobody has done a better job than Sirius at getting [their product] installed in dashboards.”

What makes Sirius XM’s business model more impressive is that they do not only stand out as a leader in the revolution of music streaming, but they get paid too! Most streaming services like Pandora and Spotify rely heavily on ad revenue instead of paid subscription fees. In the case of Sirius XM, their ease of access has consumers willing to fork over the cash for a product whose value is slowly approaching $0.00. And it gets even better—Sirius XM actually uses their revenues to pay royalties to labels and artists. While compensating the copyright holder for their work seems like a no-brainer, artists receive only pennies per stream. Superstars remain unaffected by this system, however, for independent artists, royalties for digital transmissions often only add up to a few dollars. Luckily, Sirius XM seems to be providing some hope for smaller artists looking to make a living off of music in the digitalized world.

According to Jazz musician Andy Snitzer, “all the money comes from Sirius XM.” He claims that Sirius XM is responsible for 3/4ths of the royalty monies in his statement from SoundExchange. “[Sirius XM] pays more than all of the other services combined,” concludes Snitzer. Of course, lucrative returns for both the music industry and Sirius XM will attract more streaming services to make revenue from the automobile. Director of International Partnerships for Google, Sami Valkonen, predicts that “the car will be a big battleground going forward,” as more and more streaming services attempt to cash out on the accessibility of automobiles. Currently, Sirius XM is contested only by terrestrial radio which does not offer the range, nor the variety of satellite radio. However, if Valkonen’s words are any prediction for the future, expect the streaming revolution to take place not only on your keyboard, but on your dashboard too.