Major Labels

Will Streaming Overtake File-Sharing & Downloads?

image from Elliot Van Buskirk at points to the latest numbers released by the NPD Group, which suggest that streaming music is growing faster than music downloading in the United States. The interesting part of their findings is that they back up the contention that the streaming is a double-edged sword.

On one hand, it pushes fans to stream music instead of file sharing it. A good thing. Yet, on the other, it also suffices the appetite of fans that would've otherwise bought legal downloads. Put differently, the record industry won't pull fans away from the Pirate Bay without deterring them from iTunes too.

This is the dilemma. Creating a music experience that's better than piracy also means that it would have to be better than buying it too. Since, at least at this point, streaming doesn't pay more than downloads; the incentives for the record industry to promote the development of a robust streaming sector aren't there.

It's like the early days of iTunes. Labels understood that they needed to endorse a reliable method for fans to obtain single downloads, but they also needed to maintain their relationship with big-box retailers—the bread and butter of music sales. They had to give fans what they wanted without seriously damaging store traffic. Now, they're running into the problem of sustaining digital downloads as a business model while still promoting the growth of the emergent ecology of music services online, because they can't afford to cannibalize the digital album market.

It makes you wonder. Is the record industry readily embracing services that lead fans to convert from file sharing to legal means? Of course, they are. It's why we have some of the amazing services that we have available. However, it doesn't seem like the sites are at their full potential. If the services were, they'd be both better than downloading for free and going into a store and buying it, let alone, the cold experience of getting music on iTunes. Fix the file sharing problem, through rapid innovation, and you break the current business model, without getting a new one. That seems to be where things are at now. We know how to fix the record industry, on some level, it's just that doing so would actually break it… again.

Image Credit: Toothpaste For Dinner.

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  1. Reality is streaming will of course grow faster than download simply due to being a new way to access content.
    Secondly, does the the consumer really care about streaming? We all just want content faster and more easily accessible across all devices (without having to copy files), regardless of the delivery method. The sooner services leverage this instead of simply chanting “streaming” then perhaps the uptake will expand. Apple did it with iTunes and iPods. Before Apple took over as the dominant digital music distributor everyone was up in arms about DRM on MP3s. Does anyone complain anymore if they have iTunes and a Apple device? No, because Apple don’t make it an issue, its seamlessly built into the experience. Of course DRM is still there.
    No business gains customers simply by saying “hey we have a cloud,” the same goes for streaming.
    The only way streaming content will really take off is if
    a. mobile networks improve not only their coverage but connectivity, sustainability of connections, and download speeds
    b. cost of data goes down and is not charged as a “premium” or “luxury”
    c. content across all devices actually happens. There is still way to much restricted access even on paid content (or multi device sharing is too complicated) i.e. rentals on Apple TV, can’t then watch on iPhone or laptop
    d. streaming and download work together – download is retained for higher quality files (HD, extra’s, album and track apps) with streaming for fast anywhere access.
    The only challenge I see with streaming is that the entire streaming business model really does stamp on the cost of owning content and the premium content owners charged for actually owning a physical file of the content. Revenue from streaming music is not sustainable and yes, I know every artist can apparently make money elsewhere, however in the grand scheme of things every industry has to have predictable quarter after quarter income rather than sporadic “crowd sourced” payroll sources. If we could all make money off of side products then why do we still pay money for newspapers and magazines that are full of advertising? Why do we still pay money for books when authors can give paid lectures? why do we pay for films at cinemas when we actually spend more on popcorn?

  2. No.
    …Because I believe music fans are much more smarter than that. Charging for access to ‘the same songs’ you can access almost anywhere on the internet is just not cool.
    But I do believe that streaming could work if it is coupled with downloads.

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