Ask the owner of any bar that hosts occasional live music how they make money and they’ll tell you it ain’t from the music. The music is there to draw a crowd to sell more liquor to, which is where the profits are. The cover charge helps defray the cost of the band so it doesn’t all come out of the liquor receipts. These days, the music streaming business is starting to look a lot like those gin joints.
While Spotify, Pandora and Apple are drawing pretty good crowds, none of them are making money from the music. And they’re starting to cast about for other ways to make money. Pandora recently plunked down $450 million to buy live-event ticketing service Ticketfly, presumably hoping for some synergy between those who listen to music on Pandora and those who buy tickets to live shows and concerts. Spotify is trying to leverage its music audience to build a business around non-music content, such as online video.
Apple insists it can eventually make money from music streaming, but with Apple it’s always at least as much about finding new users for its devices, where it makes nearly all of its profits, than about any particular service.