This streaming thing is really catching on, Tesla wants in

23 Jun 2017

Tesla. Image: Natalya Okorokova/Shutterstock

Spotify’s losses mount, Apple wants a revision to its share of royalties, and now Tesla wants to navigate its own path through the streaming environment.

Tesla is reportedly meeting with record labels, with plans to one day provide its own music streaming service in its vehicles.

Recode claims that Elon Musk’s electric auto company “has had talks with all of the major labels” with a view to getting the music into its vehicles, on its own terms.

This makes for a busy time for the music industry. Spotify, still struggling to turn a profit, has recently renegotiated terms with several labels, with more to come.

Apple, for its part, is seeking to reduce record labels’ share of revenue from streaming, following Spotify getting its rate from 55pc down to 52pc. Apple Music pays a higher rate, with Bloomberg claiming this initial overpayment was to “placate the labels, who were concerned Apple Music would cripple or cannibalise iTunes, a major source of revenue”.

So it’s clear that decision-makers at EMI, Warner Music, Sony and Universal Music are busy bees of late, negotiating, renegotiating and, ultimately, diving fully into streaming.

The numbers make sense, too. Tesla sales, while barely a speck on the global automotive industry, are soaring. It delivered 100,000 cars in January alone, and that figure is just the low end of what’s to come, with pre-orders for the Model 3 far greater.

It is expanding into more and more markets, and, as cities and states get behind electric vehicles by investing in greater infrastructure, there’s a decent chance that Tesla’s business model is timed incredibly well.

“We believe it’s important to have an exceptional in-car experience so our customers can listen to the music they want from whatever source they choose,” said Tesla.

“Our goal is to simply achieve maximum happiness for our customers.”

Spotify, the dominant force in the streaming environment, is struggling to get into the black. Despite reporting a growth in paid subscribers to 50m in March (up from 30m one year previous), losses remain. And they’re big.

The Swedish company released its 2016 figures this month, with €539m marking its largest loss to date.

Revenues at Spotify are soaring, rising 80pc to around $2bn in 2015, then growing to around $3.3bn in 2016. It also reported a growth in general users, up to 140m.

Tesla. Image: Natalya Okorokova/Shutterstock

Gordon Hunt was a journalist with Silicon Republic