For Immediate Release:

Friday, March 22, 2019

Featuring CRB, Spotify, Amazon, Pandora and Teladoc

TGIF. We hope your corner of the world saw some spring sunshine this week. Ours did, and we are thrilled to emerge from a long winter. Before you power wash your patio or dig into your garden, check out this week’s Five on Friday stories: streaming services appeal dramatically higher royalty fees, Apple banks on gaming as the next big thing, Teladoc grows as consumers attempt to contain healthcare costs, what content publishers should consider, and income-as-a-service revenue models to explore.

 

 

Four Streaming Services Appeal CRB’s Decision to Raise Royalty Fees by Nearly 44 Percent 

A year ago, the U.S. Copyright Royalty Board made a decision to raise royalty fees nearly 44 percent. The CRB decision was only published in February 2019, so it has not yet gone into effect. Now that it has been published though, streaming services only have 30 days to appeal it…and some of them have. Spotify, Google, Pandora and Amazon are appealing the order which will boost royalty fees 43.8 percent over the next five years, to more fairly compensate songwriters and music publishers for their work, reports Pocket-Lint. Apple has not yet appealed the decision.

Pocket-Lint speculates that the streaming companies who are fighting the royalty increases offer a freemium model, and this could effectively wipe out the free tier. Apple does not offer a free version of its streaming music service, so Pocket-Link says it is not necessarily at risk.

Spotify, Google and Pandora issued the following statement, which was first published by Variety:

“The Copyright Royalty Board (CRB), in a split decision, recently issued the U.S. mechanical statutory rates in a manner that raises serious procedural and substantive concerns. If left to stand, the CRB’s decision harms both music licensees and copyright owners. Accordingly, we are asking the U.S. Court of Appeals for the D.C. Circuit to review the decision.."

David Israelite, president and CEO of the National Music Publishers’ Association, said the hope that relations between digital music services and songwriters would be improved has been extinguished. Israelite called those appealing the CRB ruling “big tech bullies." who “do not respect or value the songwriters who make their businesses possible.." He thanked Apple Music for not joining the fray.

It looks like this could get ugly.

Why is Apple looking at gaming subscriptions as the next big thing? 

According to CGTN America, Apple is looking at offering a gaming subscription as its next big thing. Apple has not confirmed this, but sources are saying that the tech giant has talked to publishers about offering games in the form of a subscription, probably similar to Xbox, Sony, PlayStation and Nintendo, among others. In exchange for a monthly or annual premium, subscribers get access to a catalog of games they can play as long as they remain subscribers. Research shows that subscribers are more likely to buy games and make other purchases than nonsubscribers, so subscription gaming services are a win for everyone involved.

The big question is why gaming. Doesn’t Apple already have a lot going on? Like a lot of companies, Apple wants to diversify revenue sources. It doesn’t want to rely solely on revenue from software, hardware or iPhones and iPads. If any one or several of those products goes belly up, they have a revenue hole to fill. Perhaps that’s why Apple is branching out into other services like Apple Music, a subscription-only streaming music service; a streaming video on demand service which may be launching later this year; and expanding Apple News, building on the Texture subscription service it acquired last year.

In the CGTN America article, LA Business Journal tech reporter Samson Amore said, “They know investors really love subscriptions. Subscriptions really get investors going when it comes to putting more money into acquisitions or things like that.."

Read more on CGTN here. 

Teladoc’s Revenue Grows in Double Digits as Consumers Try to Contain Healthcare Costs 

At the end of February, Teladoc Health (NYSE: TDOC) posted its Q4 and full year 2018 financials. Among the highlights are revenue of $122.7 million, a 59 percent increase year-over-year. For the full year, revenue was $417.9 million, a 79 percent increase over 2017. In addition, fourth quarter visits were 861,000, an 86 percent increase, and visits for all of 2018 were 2.6 million, an 80 percent increase. Subscription revenue accounted for $102.7 million, or 83.7 percent of total revenue in the fourth quarter. The remainder of revenue came from paid visits and visit fees.

Those are great numbers, but what do they really mean? They mean consumers are trying to find a way to control their healthcare costs, and Teladoc is an easy way to do that. If you aren’t familiar with Teladoc, it is a service where subscribers can speak to a licensed doctor online, by video or phone call or via the Teladoc mobile app to get help with routine health concerns like cold and flu, bronchitis, allergies, pink eye, skin infections and some behavioral health issues. Patients can use the mobile app to schedule a doctor visit, manage their medical history or send a prescription to their nearest pharmacy.

“As virtual care becomes mainstream, we are uniquely positioned across all of our channels as the only global comprehensive virtual healthcare solution,." said Jason Gorevic, CEO of Teladoc Health in a February 27 news release. “We continue to extend our leadership position by delivering the highest quality care, successfully engaging consumers, broadening our scope of services, and expanding our global geographic reach.."

The service, who says it offers the most comprehensive virtual care solution, boasts more than 20 million members, 3,100+ licensed healthcare professionals, trained physicians and dermatologists and therapists, each with average experience of 20 years.

“We are transforming how people access healthcare around the globe,." says Teladoc on their website. 

Content Publishers: Ad-Based, Subscription-Based Models or Hybrids - What to Consider 

If you are a content provider, whether it is audio, video or publishing, which model is better – an ad-based business model, a subscription-based one or a hybrid? There is no one-size-fits-all answer to this question. It really depends on your audience, your needs, their needs and your goals.

In a recent blog post on The Sociable, Dan Goikham talks about streaming services that use a hybrid model. Spotify, for example, utilizes a freemium model. Users who choose the free tier are exposed to ads in exchange for free streaming music. Users who prefer to skip the ads and get just the music or podcasts can subscribe.

This model serves several purposes. Spotify can offer different pricing models to different users, based on their needs and tolerance levels (e.g., I hate ads and will almost always subscribe to avoid them.) It also helps Spotify diversify its revenue sources, so it is not dependent on just subscription fees or just ad revenue. Apple Music, on the other hand, is a subscription-only model. It wants subscription revenue, not advertising revenue.

Among the streaming video services, another model is emerging this year – AVOD. Ad-supported video on demand services like Tubi give viewers unlimited access to video content in exchange for watching ads. You remember those – we used to call them commercials. Now they are called pre-roll, mid-roll or post-roll ads. Previously, the SVOD model like Netflix was more popular. In this case, it boils down to user experience, says Goikham. What are your customers willing to pay and what types of experiences do they want?

For more on this fascinating – and highly subjective – topic, read “What Content Owners Need to Consider When Choosing between Ad-Based and Subscription-Based Models.."

Subscriptions: Income-as-a-Service?

As the subscription economy grows, there seems to be an almost infinite collection of business models that bring in monthly recurring revenue, or MRR. In a March 15 article on The Global Dispatch, a guest contributor Ariana Smith categorized these models as “income-as-a-service” and offered 10 different ways that businesses can diversify their revenues to take advantage of this IaaS model. Here are few for you to consider:

1. Premium content and advice: If your business has expertise in a particular area, like marketing, finance or ecommerce, consider offering premium content and advice on a subscription basis. Offer teasers for free, but for in-depth advice like case studies and white papers, sell your expertise for a monthly fee.
2. Tech support and service retainers: There are a variety of professional providers like doctors, lawyers and tax advisors who are now offering their services on a retainer or support basis. Patients or clients pay a little each month in exchange for access to the service when they need it. Teladoc is a good example of such a service.
3. Product subscriptions: As people get busier, they put a premium on the value of their time. This makes product subscriptions valuable, because companies like Vetsource, Chewy.com and Harry’s provide everyday products to you on a continuous basis, taking the guesswork out of knowing when it is time to refill Fluffy’s prescription or restocking your toiletries.

For more ideas, read Smith’s original article on The Global Dispatch.

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