The Future of Music-Streaming Services Is Being Held Back by the Present Music-Streaming Services

By Bulent Yusuf on at

Let's talk about music streaming. How much does it figure in your listening habits? Do you ever envisage stumping up the cash for a monthly subscription? We ask because the music industry is pinning its future survival on it. Why this particular model? Because it's one that they can control.

At a round-table discussion in London last week, Tim Schaaff (President of Sony Network Entertainment), Oliver Barnes (Digital Business Director, Universal Music Group) and Jeff Hughes (CEO of Omnifone) met with the press to have a round-table discussion about "the future of music streaming services". Of the three, Schaaff was the biggest fish, given his position at Sony and previous history at Apple as the guiding light of QuickTime. The ostensible purpose of the gathering seemed a little puzzling, given that many folks have already decided about the future of streaming services. It's called Spotify, and thanks to its blossoming romance with Facebook it's doing very well, thankyouverymuch.

We sat around the table at an ungodly hour of the morning, knocking back the coffee, and fervently hoped that there would be some kind of surprise announcement. Perhaps a revolutionary music device with a touchscreen that played music and was the size of a postage stamp. No wait, that's the iPod nano isn't it? Early morning starts have a tendency to scramble our brain, as you might have guessed.

What we got instead was a series of PowerPoint presentations, where each of the trio told us about the booming health of music streaming, and that the future was looking bright and rosy for consumers and the industry alike. Did you know, for example, that the market is predicted to grow from 5.9 million subscribers in 2011 to 161 million by 2016? Clearly, the purpose was to remind everybody present that, in the wake of Spotify, Grooveshark and Deezer et al, these guys were still hard at work and still plugging away, eagerly awaiting potential customers to recognise their virtue.

During a Q&A session, the subject of Spotify came up, where Schaaff drew comparisons with MySpace. Today's dominant brand could easily fall from favour tomorrow, he reckoned. But credit where credit was due, there was also acknowledgment that Spotify had blazed a trail for the rest of them, showing how music streaming could work and be adopted by the wider masses and yet also turn a coin.

And therein lies the problem. As MP3tunes' Michael Robertson describes in elaborate detail for GigaOM, independent streaming services (the ones not owned by the record labels or consumer tech companies) are hidebound by ridiculous licensing deals which preclude them from ever making a profit. Upfront payments and equity stake are only some of the strongarm tactics being employed to allow music streaming companies to present a comprehensive catalogue to their users.

This illuminates two things. Firstly, the music industry is still set on applying outdated, legacy business terms to music streaming, and in the process are precluding those nascent, innovative companies from growing. Schaaff makes reference to the fact that there are around 260 digital subscription services currently in operation, and that most of them are going to fail. A good reason is because of the commercial and legal restrictions they have to comply with.

Secondly, and maybe we're being overly optimistic here, but these restrictions will give rise to another paradigm shift in the way which we consume and distribute our music. It's inevitable, especially where technology and the web are concerned. Companies can't flourish, and music fans aren't getting the service they want, and soon enough there'll emerge a new way to sidestep them. Anyone trying to exert control over this process – rather than facilitate it – is doomed, a bit like dinosaurs staring at a meteorite.

But back to the roundtable. Some lessons seem to have been learned at least, based on Schaaff's statements, such that formats and DRM are no longer an ongoing concern for Sony. The new strategy is to be cross-platform, with the distinct possibility of services like Music Unlimited appearing on non-Sony devices in the future. Android powered-devices will probably be the first beneficiaries of this. It's a staggering about-turn from a company that once manufactured MP3 players that didn't play MP3s, and spunked millions trying to push the ATRAC3 format, but is it all too little, too late?

Also, believe it or not, the next battleground for streaming music services is going to be in your car. Manufacturers like Ford have stopped installing CD players in their vehicles; the future of in-car entertainment is going to be all-digital and always online. Pretty soon we'll all have a dazzlingly elaborate means of listening to Status Quo in surround-sound stereo whilst stuck in traffic on the M25, and having data like track listing and location scrobbled out to your social network of choice.

These are interesting times for the streaming music industry, to be sure. There are a lot of players involved, and already the key brands are cementing their position. Is there a future for streaming music services? No doubt about it. What about the music industry itself; does that have a future? That's a trickier question to answer.

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