What Broadcasters Are Talking About When They Talk About Netflix ‘Ratings’

The chattering and sniping touched off by NBCUniversal research head Alan Wurtzel’s release of purported ratings data for Netflix last week during the Television Critics Association winter meeting, taken from network-backed Symphony, is still going strong.

After blasting the numbers released by Wurtzel as “remarkably innaccurate,” Netflix piled it on in its Q4 letter to shareholders this week:

The growth of Netflix has created some anxiety among TV networks and calls to be fearful. Or, at the other extreme, an NBC executive recently said Internet TV is overblown and that linear TV is “TV like God intended” [sic]. Our investors are not as sure of God’s house-of-cardsintentions for TV, and instead think that Internet TV is a fundamentally better entertainment experience that will gain share for many years. The challenge for traditional media companies, most of whom see the future pretty clearly, is to use the revenue from Netflix and other SVOD services to fund both great content and their own evolution into Internet TV networks. Seeso, BBC iPlayer, Hulu, CanalPlay, HBO Now, and CBS All Access are the beginnings of these efforts.

Our titles are watched on the go and at home on a wide range of devices, making measurement of the viewing of any given title difficult for third parties. We don’t release title‐level ratings as our business model is not dependent on advertising or affiliate fees. Instead, we release “ratings “ for Netflix as a whole every quarter with our membership growth report (75 million and counting!). It is member viewing and satisfaction that propels our growth.

It’s that bit about Netflix not being dependent “on advertising or affiliate fees” that is at the core of the controversy. Read More »

Rethinking Music: What The Industry Could Learn From Netflix

It seems fair to say that no one in the music business right now is happy with how it’s being run. As streaming, including both paid and ad-supported, has replaced CD sales as the industry’s main economic engine, the record companies have seen gross revenue decline sharply, artists and songwriters have seen their royalty income diminished, and the companies doing the streaming are losing so much money they’re losing the ability to raise more of it.

In an interesting thought experiment at the Future of Music Policy Summit in Washington this week, musician and CEO of touring van rental service Bandago Sharky Laguana, considered how one component of the industry’s current business model — how subscription revenue Music_Festivalfrom paid streaming services is ultimately allocated to individual artists — might be made more fair, if not necessarily more lucrative.

In very broad strokes, of the $10 a month most subscription services charge consumers, the streaming service keeps $3 (30 percent) and $7 (70 percent) is paid out in royalties (theoretically to artists and songwriters but in practical terms to labels and publishers who are supposed to then distribute them). The portion of that $7 accruing to any one label is calculated based on how many times songs recorded by any of the artists under contract to the label are streamed by subscribers, typically resulting in a per-stream value of a fraction of a penny. Read More »

Apple Covers Its Musical Bases

There are two ways you could look at Apple’s emerging music strategy. It’s either extremely ambitious, or Apple isn’t sure what to do in music so it’s trying everything.

The two need not be mutually exclusive. In fact, no one in the streaming music business seems terribly confident about their own business model right now, even as new players continue to pile into the market.

Apple is widely expected to announce a subscription music streaming service next week at its World Wide Developers Conference, offering unlimited, on-demand iTunes_adaccess to music from the major and leading independent record labels for $10 month. That will pit it Apple directly against Spotify, currently the leading subscription streaming service, with 15 million paying users and about 45 million users of its ad-supported free tier.

Unlike Spotify, Apple’s on-demand service will not include a free tier. But Apple isn’t writing off free music altogether. Far from it. According to the Wall Street Journal, is preparing to relaunch its existing free, ad-supported web radio service, iTunes Radio, adding programmed channels, some of which apparently will be hosted by celebrity DJs such as the rapper Drake, Pharrell Williams and Beats co-founder Dr. Dre, who is now working for Apple. Apple also recently hired away a group of producers and DJs from BBC Radio 1 to help with the programming. Read More »