The Future of Cloud-Based Music Streaming update from March 2011

clouds-mobile

Cloud computing is gradually revolutionizing the music industry and the way digital music is being consumed. Instead of buying and downloading (digital download) songs over the internet, consumers are accessing to them via the cloud in the form of on-demand streaming services. This also brings  new services that helps users to create playlists and receive recommendations for songs and bands according to their music interests.

Cloud-based music services

Due to its enormous penetration and coverage, the mobile phone has become the device of choice for enabling cloud-based music services. As the leader in the traditional music download industry, Apple is currently preparing its iTunes music store to become a streaming service, perhaps to counteract its stalling music download sales figures. To separate itself from several other competing current streaming music services like Sony’s Music Unlimited, Pandora, Rhapsody and Spotify, Apple is focusing on providing higher-quality music for both its download and future streaming services. Google obviously has its own plans for digital music streaming for Android handsets and has been rumored to be working on a cloud-based digital music service, although it has not yet announced the relevant app or service.  It's possible that the Google music service will be integrated with Android Market, similar to the recent book tab. In fact though, hackers have already found a way to implement a streaming music service by inserting the music player from Android version 3.0, known as the Honeycomb, into adapted Android smartphones.

When it comes to smartphones, service providers like Spotify provide a premium service supporting music streaming over WiFi and 2.5/3G networks. If the network connection is poor,  users can store songs and playlists in offline mode as well. Users can also sync their mobile and computer so that playlists are identical on each device. The Music and Copyright blog provides a good overview of the current cloud-based music service providers and which of them already offer support for mobile phones.

Smartphone streaming is the future

Some music industry professionals, such as Christian Ward, the digital music PR specialist from Clarity Communications, are claiming that any future for music streaming has to have mobile/smartphone as its focus.  Such a claim can be substantiated by several developments. For example, last month the San Francisco-based music streaming service Pandora Media filed for an initial public offering (IPO), a move that was largely affected by the skyrocketing use of its online radio service’s smartphone apps. In the past year Pandora’s registered user base has nearly doubled, mainly due to the smartphone apps, which are nearing 80 million users. Spotify, with its approximately 10 million users is planning on launching a Pandora-like mobile streaming music service, expecting a significant growth in its user base.

Revenue models

While some of the cloud-based streaming music service providers are charging a premium for mobile streaming, Pandora is among those offering free ad-supported versions. To obtain a large subscriber base it seems that free opt-in services with mobile ads will be the model of choice for the masses, while a smaller segment of users will prefer to pay a premium to obtain ad-free music streaming to their handsets.