Sony to take another look at ad-supported music streaming

Chief financial officer says that Sony, owner of one of the world's three major labels, needs to evaluate what kind of value it's getting in allowing catalog music to be streamed for free.

Don Reisinger
CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
2 min read

Taylor Swift at a Sony event in 2010 with former Sony CEO Sir Howard Stringer. James Martin/CNET

Streaming music providers are under the microscope at Sony after Taylor Swift decided that Spotify streaming wasn't the right place for her music.

Speaking to investors on Tuesday, Sony chief financial officer Kevin Kelleher said that his company is evaluating "how much value" the artist and record labels are getting by allowing their songs to be streamed on sites that provide free access with ads.

"The key question is, are the free, ad-supported services taking away from how quickly and to what extent we can grow those paid services?" Kelleher said, according to the Wall Street Journal, which listened in on the investor call.

The move comes after Swift, the wildly popular artist, let it be known earlier this month that she had pulled her music from Spotify. Her complaint was, in part, the small sum artists typically receive from streaming services compared to other forms of paying for music, usually fractions of a penny -- something Spotify has said fails to grasp the full picture of how streaming recompenses the music industry.

Sony, however, finds itself in a rather odd position. The company has its own major record label but also provides music streaming to customers through its Sony Music Unlimited Service. Unlike Spotify, which has a free tier that anyone can access by "paying" for music by listening to ads, Sony's offering is available for $5 per month for limited access and $10 per month on a wider array of devices. Sony offers songs both in its own catalog and in those of other labels, amounting to 30 million tracks.

If Sony decides to pull out of services that provide ad-supported content to customers, that could hurt some of the most prominent offerings in the industry, such as Spotify, which is the world's top subscription streaming service by number of paid members. Though services like Spotify secure licensing deals with record labels like Sony Music Group to access and pay for their catalog, those contracts come up for renewal regularly.

While Sony has yet to make any decision on its music business, the company has made clear that it believes its entertainment operation, which includes music and movies, could grow in the next several years.

During the same investor call, Sony said that it plans to boost its entertainment business revenue by a third in the next three years, jumping to as much as $15 billion by the end of its fiscal year in March 2018, according to Reuters, which covered the call. Sony says that it believes it can get there by investing heavily in its motion pictures business and grow its revenue by $2 billion. The company hopes to maintain its annual Sony Music revenue at around $5 billion.

Sony did not immediately respond to a request for comment.