Streaming the Future 1 – Music

This blog post originally appeared on the Pearson Higher Nationals website.
The original website has now been retired.

When was the last time you, or anyone you know, purchased a film or music as a piece of physical media? For some of you, the answer may be that you’ve never purchased music as a CD or a game on a DVD or a film on a blu-ray disk (let alone on a video cassette). Some of you may never held a cassette tape or dropped a needle on to a vinyl album.

In a relatively short period of the media industry has has gone through a fundamental change. While the transition from physical to digital is still ongoing, the industry has clearly moved beyond the ‘tipping point’ and everything is heading toward the digital. But this transition is not just about a change of format (from physical media to digital media) but is transforming many other aspects; from models of production, distribution, consumption and ownership. New industries have arisen as older industries struggle to change their approach.

Listen to the music

The first sector of the media industry to make the transformation was music. Napster was one of the first, and certainly the most high profile, online services to challenge the traditional distribution model for music. Using peer-to-peer file sharing, the rise of Napster showed that users were willing to deal with music as a non-physical medium. However, since the Napster model bypassed the record companies; allowing users to share music directly with each other, they were soon fighting legal battles with the recording industry. Napster declared bankruptcy and ceased operations in 2001, but the floodgates had been opened.

There is little argument about the fact that it was the release of the iPod and iTunes (both released in 2001). While the iPod was not the first digital music player, it was the first device to achieve widespread use. iTunes was initially a digital music library management tool. It allowed you to ‘rip’ your CDs (converting the content in digital MP3 files) and upload them to your iPod. The simplicity of both the device and the software made this a great combination and started Apple on their trajectory to be one of the most valuable companies in the world.

However, until 2003, you were still buying physical media and then ‘ripping’ to create the files to store in your iTunes library, or getting your files from peers (via Napster or similar sharing systems). In April of 2003 Apple launched the iTunes Store. In the run up to the launch of the iTunes Store, Apple had been in negotiations with five major record labels, to make their music available as digital content. No more vinyl. No more compact discs. Music was now just digital data to be downloaded and Apple was on its way to dominating the music industry. By 2008, Apple was a largest music vendor in the US, and 2 years later the largest in the world.

2008 also saw the next step in the shifting relationship between music producers and consumers, with the launch of Spotify. While Apple was the largest seller of music, their model was still that of providing users with a store in order to purchase content, Spotify did something more radical. Rather than act as a store and sell a product, they took the approach of providing a service which would allow users to listen to content. Instead of buying a song or an album, you would pay to access Spotify’s entire library of music. You could list en to anything available through the service for a monthly subscription (or for free, if you didn’t mind hearing some advertising). The record companies (and the artists) would receive a small payment every time someone listened to one their songs.

The rise of Spotify relied upon several things. First, the shift from physical to digital music was already well on its way to becoming the norm. Second, the increase in mobile phone sales, coupled with the increase in mobile data speed and bandwidth, meant that more and more music was being listened on mobile phones. Finally, the increasing availability, bandwidth and dropping cost of broadband internet connections in the home. This combination meant that Spotify could provide access to the same library of songs whether the user was on the road, at home, or at work. Spotify now has 96 million paying subscribers who can access more than 35 million songs. The service is available in 79 countries and can be accessed via computers, mobile phones, gaming consoles, televisions and AI-powered speakers (Amazon Alexa, Google Home, etc.).

Following the growth of Spotify, other similar services were launched. Rhapsody, Deezer, Napster (yes, it’s back, but with different owners), Tidal, Pandora, among others have been established (and some have already closed). None of these have not been able to match the success of Spotify. However, in 2015 Apple launched their Apple Music service. Seeing that music downloads were dropping steadily, as streaming music was growing, Apple purchased Tidal and renamed it. By 2016, streaming music had overtaken digital music downloads. Apple Music is available in 100 countries, has a library of over 40 million songs and has around 60 million subscribers.

Google (YouTube Music) and Amazon (Music Unlimited) have also entered streaming music industry, but are not operating at the same levels as Spotify and Apple. Spotify has the benefit of being available on nearly every platform while Apple has the captive audience of millions of iPhone users around the world.

The future looks like streaming all the way. Every so often, I’ll see an article that touts the fact that more vinyl was sold ‘this year compared to last’ but, in reality, we are talking about a very niche industry that will never recapture the majority of distribution, no matter how any audiophiles will tell us how much better vinyl sounds, compared to MP3.

The full impact of streaming audio is still to be fully realised. The relationship between artists and listeners is changing. While the cost of distributing music has been radically reduced, this has not made it easier to be discovered. Recording companies seem to be more interested in promoting their ‘big names’; where they feel there is a guaranteed market, than in developing new talent. However, we are also seeing a shift in the way that young artists are able to capitalise on their use of social media to reach new, albeit sometimes small, audiences.

If you are subscribed to Spotify, Apple Music, YouTube Music, or any of the other services, you now have a music library that is larger than anyone has ever had in the history of mankind. And, you don’t have to have a set of shelves groaning under the weight of vinyl or compact discs. When I was younger, I used to spend hours compiling the ‘mix tapes’ for my friends; choosing the best tracks from my vinyl albums to share. Now, we can search the world’s musical output (both new and past releases) to find the new, the old, the popular, the obscure, to add to our ‘playlist’ and share with the world.

Music may not be changing but the way we engage with it and the way we listen to it, has changed in ways that we could not have foreseen and it will never be the same again.