CANNES – “The MP3 is dead.” As the Midem yearly music industry event opened in France last week, Yves Riesel, president of music streaming service Qobuz, declared the end of the top online music format.
“From Feb. 1, we won’t be selling MP3s anymore. All of our downloadable content will be in CD quality sound, without compression, to give music its full quality back.”
It sounds like a gimmick, but this will allow Qobuz to set itself apart from competitors by limiting its downloadable files to the WMA, ALAC, AIFF, OGG, FLAC and WAV formats. Living in the shadow of Deezer, Spotify and iTunes, Qobuz is a French UFO in the musical universe. Since 2008, the streaming service has been increasing slowly but surely – to finally reach a library of 12 million titles today.
While its competitors aim for the largest audience by offering free subscriptions that are paid for by advertising, Qobuz only has paid subscriptions, which are “high quality” and “very high quality.” There is a 9.99 euro unlimited streaming offer and a 29.90 euro subscription for “HD quality” music, as well as a special subscription for classical music, which is only 19.99 euros. This is far more expensive than Deezer and Spotify’s 4.99-euro offer.
“The problem is that in this industry, no one makes a living through streaming except for Lady Gaga,” explains Yves Riesel. “Some might consider us as a streaming site for rich people but I prefer to say it’s a place for music lovers who are ready to pay the price for music labels to survive. With a 19.99-euro subscription, the labels get back 20 times more what the other streaming sites give them.”
This is a unique approach in a sector that has been struggling for many years now. In 2012, global music revenues fell by 5%. “This downward trend, which has been going on in the past few years, is the same as the one that affects physical formats – vinyls, CDs, DVDs, etc.” says David El Sayegh, head of the French music producers union (Snep). These numbers aren’t compensated by digital music revenue (downloads and streaming), which represent 25% of the market share.
“The future of music is online”
Because of this crisis, music industry players have been asking for financial compensation from Internet companies, namely Google. Their approach is the same as the press industry. “There is a problem with the transfer of value between those who produce content and those who benefit from it (Internet providers and search engines), which can only be settled with copyright laws,” says Pascal Nègre, CEO of Universal Music France. “In the past 15 years, there has been a massive transfer of value between these two worlds,” adds Jean-Noël Tronc, head of the French music copyright collection and distribution body Sacem.
“These past 12 years, the government has encouraged the development of high speed Internet and digital networks without taking into the content providers who ended up paying for the Internet cables. Now is the time to make things right,” say the French organization of Independent Disc Producers (UPFI).
This crisis has taken a special turn since music retail giants HMV (UK) and Virgin (France) filed for bankruptcy.
“The future of music is online,” predicts Yves Riesel. “The road to success is winding and expensive but we live in a time when we have to make changes. If we want to save the French music industry, we need to keep investing and get help from the government. It doesn’t have to be subsidies, we just need to be heard.”
This could very well be the push the National Music Center (CNM) project needs. This institution was supposed to give financial support the music industry, but at the last minute the government scrapped the project. “It was supposed to be a one-stop-shop for creating or helping local distribution platforms,” says Axel Dauchez, the president of the French online music services union (ESML). “Without subsidies, the whole distribution system is at risk.” The ESML, which is asking for an “urgent two million euro fund” to help the platforms, denounces unfair competition from foreign companies.
Despite the depressing atmosphere, “things are looking very good for Qobuz,” claims Yves Riesel, who is ignoring the bad numbers. He is confident that his streaming service is going to generate benefits within a year. The website already has an international reach. It’s implanted in Belgium, Switzerland, Luxemburg; next summer in Germany, England, Holland, and Eastern Europe. The best thing would be to launch in the U.S., where Riesel hopes to launch next year.
And Qobuz will do all this without using MP3s: “Our streaming subscriptions offer online and offline audio platforms,” explains Riesel. “Downloading is on the way out, MP3s have lost their appeal. That’s why iTunes is thinking about launching its own streaming service.”
He concludes: “In 2008, we were called “French dreamers” for daring to go head to head with iTunes and Spotify, but we’re still here, looking at the future. In the end, Qobuz is a great success story made in France.”