Just as the music industry was getting used to the idea of another shift in formats — from compact discs as the distribution mechanism to digital downloads over the Internet — another huge change in the way people listen to music looks set to shake the business to its foundations.
A decade after Steve Jobs revolutionised music delivery by creating Apple’s iTunes Music Store — offering consumers digital downloads for US$0,99 a pop and providing consumers a legal alternative to sites like Napster — a new era of music streaming based on an all-you-can-eat monthly subscription model is about to upend the status quo again.
It’s a development whose outcome could make previous format shifts look trivial by comparison. It could also represent the final format shift in a long line of formats that started with the phonograph cylinder and the gramophone record more than a century ago.
This time around, it’s not Apple that’s led the charge but a Swedish start-up called Spotify.
Spotify’s business model is simple: pay us a fixed monthly fee, and in return you can listen to millions of songs streamed over the Internet as often as you like, from your phone, tablet or PC, with no need to pay for individual downloads. Spotify ensures that record labels and artists receive their dues based on how often tracks or albums are streamed by subscribers.
The Swedes have, however, suddenly found the market they pioneered very crowded indeed. Music streaming has drawn the attention of the world’s biggest technology companies, including Microsoft and Google, both of which are keen to use media content and other value-added services — music is just one of many — to entice users to their mobile platforms. In some respects, the music industry is becoming little more than a pawn in the smartphone war. Its future may be determined by forces now largely out of its control.
Google became the latest tech giant to enter the market. At its annual developer conference in San Francisco this month it took the wraps off Play Music All Access, a streaming service costing $9,99/month. It’s only available in the US for now, though it’s possible for non-Americans to sign up using a little technical trickery.
Microsoft launched Xbox Music in October 2012 in some markets, with the company’s local office promising to offer the service in South Africa, though it’s introduction has been delayed several times.
Nokia’s been quicker to market, offering its Nokia Music+ streaming service to South Africans since last month, with access to 15-million songs at an aggressive price of just R25/month — far below rivals’ prices. And there are a raft of start-up hopefuls, from Germany’s Simfy, which was launched in South Africa last year in partnership with Primedia, to France’s Deezer, which has partnered with Orange, the French telecommunications giant that has expressed an interest in launching a telecoms business here in competition with Vodacom, MTN, Cell C and Telkom Mobile.
Apple is uncharacteristically late to the streaming game — perhaps because it’s milking its lucrative iTunes downloads business for as long as it can, or perhaps because it’s playing hardball, as it has in the past, in its negotiations with the record labels. Nevertheless, it is strongly rumoured to be planning an “iRadio” service this year. It has no other choice.
Of course, streaming music has its drawbacks, especially in countries, like South Africa, where broadband coverage is spotty and expensive. The last thing most users will want to do is burn through their meagre mobile data allowances listening to streaming music.
In homes with fixed-line broadband — unfortunately, only a small minority in South Africa — the proposition is quite different: on uncapped connections, streaming makes absolute sense. The developing world may take a little longer to adopt streaming on a mass scale. It will happen, though.
The broadband situation in South Africa will improve, especially when additional radio frequency spectrum is licensed to operators to build fourth-generation networks. This should help reduce the per-megabyte cost of bandwidth dramatically in the years ahead. Now that’s music to anyone’s ears.