The Canadian Music Company That’s Betting It All Against Streaming

You may not recognize the name Stingray Digital, but if you have cable TV, you know their work. Check out this article from Canadian Business on why the Montreal-based company is pushing an alternative to streaming music.

Eric Boyko steps out of a boardroom and exclaims to no one in particular, “That was a lot of work for one phone call.” He’s wearing a light pink shirt, open at the collar, a mop of sandy hair resting atop a face that seems permanently flushed. Boyko has just completed a quarterly earnings call for the company he co-founded, Stingray Digital Group, which went public last year. He’s evidently still adjusting to some of the demands of operating a publicly traded entity. But Boyko doesn’t dwell on this for long. He heads to his office, grabbing a sludgy protein drink along the way. “I have to do my two scoops,” he explains. “I’m running around all day from meeting to meeting.” Indeed, after sitting for part of our interview, Boyko says he has to use the washroom and does not return.

The francophone entrepreneur, who has signed his emails with the exhortation, “Go, Go, Go,” for years, has good reason to hustle. Stingray Digital, based in Montreal, is an unlikely player in the US$15-billion recorded music industry—an industry that’s changing rapidly and plagued with uncertainty. On-demand streaming services such as Spotify, Apple Music and Google Play have been heralded as the future, giving consumers access to millions of songs on their device of choice for only a few dollars a month. A handful of smaller online players are fighting for music lovers too, including Tidal, Pandora, Rhapsody and Deezer. Stingray’s strategy is markedly different. All of those genre-specific, audio-only music channels way up in the triple digits that come with your cable or satellite subscription? Stingray produces those, employing a team of 100 music experts to assemble playlists for every conceivable genre. On the surface, the business model seems downright foolish. Cord cutting is expected to accelerate, cable packages are being unbundled, and consumers are spending more and more time with mobile devices.

But Boyko argues that not only does Stingray have a place in a world with bigger, better-funded competitors, but it can also thrive there. “The whole market is being subsidized by venture capital,” he says of some of his peers. “Once the VCs stop funding them, the only players out there will be Google and Apple. Maybe Spotify has a chance, but the other guys—it’s a matter of time.” There’s evidence to support this view: In 2014, Google purchased streaming music service Songza, while last November, Pandora picked up the remains of Rdio, which declared bankruptcy and shut down. And once you dig past the surface, Stingray’s strategy is not quite as outlandish as it appears. Its direct customers are cable and satellite providers—not fickle consumers—who pay the company to carry its channels. Stingray’s service is considered non-interactive, meaning users can’t pick and choose songs. As a result, the royalties it pays to musicians are far lower than those disbursed by on-demand services, making it cheap for telcos and subscribers alike.

Keep reading. Thanks to Bobby for the link.