July 25th, 2009
Streaming music fundamentally changing music business
The New York Times has a piece that backs up my recent contention that streaming will mark the end of illegal downloads.
Brad Stone’s article says flat-out:
Many music industry observers now believe that there is a fundamental shift under way: from illegal downloads to licensed streaming services like MySpace Music, imeem and Spotify, where users can play any song, anytime and — coming soon — on any device. These sites are free, supported by ads, and with an expanding catalog of songs, they are finally ready to overshadow the more cumbersome, unauthorized services that can be hard for newcomers to navigate.
The article doesn’t mention Pandora but makes a special point of promoting Spotify, which sports a clever business model for a service with massive pre-release buzz: pay to get in now or wait in line.
Spotify’s innovation is subtle, embedded in its intuitive user interface and efficient design. Anyone familiar with iTunes can figure out how to navigate Spotify’s s five million songs and add them to playlists.
Cofounder Daniel Ek argues that illegal downloaders are satisfying the desire to have music on demand. “It’s not like people want to necessarily have it for free,” he said. I’m not sure about that: iTunes is essentially music on demand. The appeal of streaming is that I don’t have to do any work. I turn on Pandora, possibly create a new station, and I discover new music I like as well as listening to artists I know and love.
There will be both streaming and online downloads. CDs? Not for that much longer. Ultimately this is what’s most important: music will no longer be a product that you buy. It will be the fodder for a service that you subscribe to. Like cable TV. There might be some premium services, too, but product sales? That’s over.
“The key is to just get $10 from everybody,” [industry watcher Bob Lefsetz] said.
