Is streaming the future of music?
Published: 27th Jan 2010 09:27:34
With free, legal access to almost any music at any time, streaming services like Spotify and We7 are a dream for many music fans.
Some believe streaming will overtake downloading to become the most popular form of digital music.
But there are still big questions over whether such services can make money - and whether record labels will let them work.
You're at your computer, listening to a new album, or an old favourite, or a playlist of songs a friend has suggested you might like, over the internet.
You pick up your mobile phone and keep listening, and your playlists automatically come with you.
Your car stereo is connected and knows your favourite songs too. And when you get home again, so do your games console and web-enabled TV set.
That is the utopian vision of listening to anything, anywhere that has been peddled for years.
But that day is nearly upon us, if the music streaming services are to be believed.
They promise to connect us to a vast song catalogue in "the cloud" - a technical term that means "the internet" - permanently and instantly via every possible device, bar your toaster.
The big difference with music downloading, which is currently the dominant form of digital music, is that we will not pay for each track, nor will we own and keep the songs.
Streaming is more akin to radio, only we choose the tunes. And it has begun to explode in the last 12 months, with Swedish service Spotify, currently available on computers and mobile phones, leading the way.
Spotify now has seven million users in six countries. We7, its main rival in the UK, has 2.5 million users and launches a mobile application on Monday.
MySpace recently launched streaming services in the US, UK, Australia and New Zealand.
Apple, meanwhile, is rumoured to be preparing a similar offering as part of iTunes - a big step, if it happens.
Yet there are still high hurdles to overcome before streaming really lives up to the hype.
Most fans currently streaming music do not pay. The services are legal, but the money comes from adverts in between and around the songs.
Up to now, ad takings have not been high enough to pay artists, labels and music publishers, as well as cover the costs of running the services and hosting the streams.
So some, like Spotify, are heavily pushing their premium subscriptions, which cost £9.99 a month in the UK and give users the mobile app and better sound quality.
We7 will also require fans to pay a monthly fee for its mobile version.
"The real aim for us is to grow a strong sustainable subscription model," says Spotify's UK boss Paul Brown. "That is becoming more what Spotify is about."
Does it add up economically, though? It's a question We7 chief executive Steve Purdham has given a lot of thought to.
"Historically it didn't, and it doesn't," he says. "If you look forward, however, the economics are starting to come together."
He points to Pandora, a US streaming service that has nothing to do with the exotic planet in Avatar with which it shares its name.
The service, which provides personalised internet radio stations, turned a profit for the first time at the end of last year.
MySpace, meanwhile, is planning to sell tickets, merchandise and other products alongside the music and ads.
"Consumers want an experience that includes their audio, their video, their band information, their merchandise and ticketing information all in one experience," believes MySpace chief executive Owen Van Natta.
"Having that type of multi-dimensional music experience will also bring with it multiple revenue streams. It won't just be advertising supported."
Streaming sites must also convince labels, artists and publishers that their royalties will not plummet if and when streaming replaces downloads and CD sales.
Some artists have complained about the small amount they have made from Spotify. Swedish artist Magnus Uggla removed his music, for example, claiming he earned in six months "what a mediocre busker could earn in a day."
Spotify says artist payments are increasing all the time as ad revenues and subscriptions go up.
The company is currently in the middle of a major charm offensive to win over the music industry so it can launch in the US.
"The difference in the US is the labels are not yet convinced that streaming services can exist alongside download services and purchase of physical product," says Mark Sutherland, global editor of Billboard magazine.
"They're worried that they might be giving an awful lot away, and not necessarily get much back."
Simon Wheeler, from independent record group Beggars, says the industry must accept fans will soon move away from owning music.
"We're shifting away from that fast, and anyone who doesn't face up to that fact and deal with these new financial models isn't going to have much of a future.
"It's just inevitable - the world is going to this more consumption-based model," continues Wheeler, whose labels are home to MIA, Adele and Vampire Weekend.
"It doesn't matter. It's going to happen, and we need to restructure the business around it."
The silver lining for major labels is the potential to appeal beyond their traditional customers.
Warner Music's Stephen Bryan, for example, believes ubiquitous access to streaming will let labels reach "passive" consumers.
"They aren't necessarily into owning and building a collection, which is essentially what the download and CD business models have been about," he says.
"We think streaming services represent a big opportunity to address that marketplace," he adds, estimating that demographic might constitute as much as 50% of music fans.
Another obstacle is technology, and whether it will really be possible for devices like mobile phones and car stereos to have uninterrupted high-speed internet connections.
Dagfinn Bach, a Norwegian digital entrepreneur who was closely involved in the development of the MP3 in the early 1990s, is not convinced.
He has just launched a new "deluxe" downloadable file format, MusicDNA, which includes videos, artwork and lyrics alongside music.
Streaming, he believes, is simply an "intermediate phenomenon".
"Streaming requires a high broadband network, especially if you're going to have all this additional information," he explains.
"To stream via your mobile is impossible if it's high quality. So I don't really believe in streaming in the future."
At 22:51:02 in EntertainmentA village museum in East Sussex will go up against Tate Britain and the new £35m Mary Rose Museum in a contest to be named the UK's museum of the year.
At 22:42:55 in BusinessBarclays agreed to a $280m (£167m) settlement with the US Federal Housing and Finance Authority (FHFA).
At 22:30:17 in EnglandThe government says it is making "urgent inquiries" into reports Whitehall computers were used to make insulting comments about the Hillsborough disaster.
At 22:22:33 in HeadlinesRussia and the US have accused each other of failing to de-escalate the crisis in Ukraine after Kiev launched raids on pro-Moscow separatists.
At 22:19:49 in SportWorld number one Rafael Nadal booked his place in the quarter-finals of the Barcelona Open with a 6-3 6-3 win over Croatian Ivan Dodig.
At 22:13:15 in SportFormer Rangers, Hearts and Scotland defender Sandy Jardine has died at the age of 65.
At 22:00:20 in PoliticsThe zero-hours contract - alongside the payday loan and the bad bank - has gained a kind of totemic significance in the public imagination.
At 22:00:03 in ScotlandScottish independence would leave working people north and south of the border worse off, Ed Miliband has claimed.
At 21:50:40 in BusinessInternet retailer Amazon reported a 32% jump in profits to $108m (£64m) in the first quarter of 2014.
At 21:48:30 in EnglandPolice have carried out a series of raids in east London, following a BBC London investigation into shops willing to deal in stolen smartphones.
Harvard CitationBBC News, 2010. Is streaming the future of music? [Online] (Updated 27th Jan 2010)
Available at: http://www.ukwirednews.com/news/14312/Is-streaming-the-future-of-music [Accessed 24th Apr 2014]
News In Other Categories
The zero-hours contract - alongside the payday loan and the bad bank - has gained a kind of totemic significance in the public imagination.
With the doors to its brand new £1million training centre officially open, one of the UK's leading apprentice training providers, Bristol based S&B Automotive Academy, is showcasing its world-class facilities by launching a series of foreign student exchanges for the first time in its 41-year history. To get a flavour of what life is like as an apprentice in the UK, the Academy hosted 16 apprentice engineers and bus drivers from the G9 Automotive College in Hamburg, Germany, as part of a Europe-wide vocational training initiative called the ‘Leonardo Programme’ with support from the European Social Fund. In a reciprocal arrangement, S&B will be sending nine apprentices to Germany during February 2012 so that they can get an appreciation of life in the automotive industry on the Continent. A further three German exchange groups are being planned for next year. Designed to assist the development of vocational skills and training across Europe, including work placements for trainees, the Leonardo Programme has a budget of €1.75bn, which is helping to encourage UK organisations to work with their counterparts abroad. In what is expected to be another challenging year for employers in the UK automotive sector, S&B’s Chief Executive, Jon Winter, claims that the exchange initiative will bring many benefits to the Academy and its apprentices: “In a world of global automotive brands, it’s important for our learners to understand the international context of the industry they have chosen to make their career. This new exchange programme will enable apprentices and Academy staff alike to achieve a better understanding of the challenges and opportunities within the automotive arena in Europe. With the Academy’s influence also extending to the USA and Asia, there’s every possibility that this initiative could move further afield in the future.” Continued Winter: “The need for skilled technicians across the world is on the increase and we actively encourage our apprentices to look at broader horizons during their training. Many of them have already learned the phrase ‘Vorsprung durch Gelehrtheit’, quite simply, ‘Advancement through learning.” In the 2010/11 academic year, S&B doubled the number of successful Apprenticeships over the previous year with some 350 apprentices graduating from the Academy. At the same time, achievement levels reached an all-time high with an overall success rate of 85%. For those learners on the Advanced Apprenticeship three-year programme, success rates were even higher, at over 98%. PHOTO CAPTION: As part of their exchange visit, S&B Automotive Academy arranged for the German apprentices to visit Hampshire bus operator, Bluestar, at its Barton Park depot. The students are pictured with S&B’s Andy West (3rd right) and Steve Prewett, Bluestar’s Area Engineering Manager (2nd right). Ends http://www.sandbaa.com
Scottish independence would leave working people north and south of the border worse off, Ed Miliband has claimed.