Is Music Moving to the Cloud?

By Nicholas Deleon

One of the highlights of last week’s SXSW show, aside from seeing the Austin Crew again (hi, guys!), was when I spent some time talking to a few of the guys from Rhapsody, just like I did last year. The conversation touched a number of topics, but the one I found most interesting was the changing notion of music ownership. That is, now that most of us are at least familiar with streaming, on-demand music from pick-your-service (Imeem, Pandora, Spotify, Rhapsody (part of RNWK), etc), will people in the future still see music as a “thing” that they’ll own, or more like a service that they’ll tap into whenever the need arises? Will people still cling to a finite number of MP3s on their iPod, or will they prefer to have their music on The Cloud, using a device (say, the iPhone) that can call upon any song at will? A sort of, “Shoot, I wish I had that U2 song on my iPod right now” versus, “Here, let me stream that U2 song for you.” And, if people are becoming more comfortable with this type of music consumption, where does that leave traditional, download-to-own services like iTunes (AAPL) and Amazon (AMZN) MP3? The things we think about!

It’s like this: we’re right about at the point where most of us have a smartphone or other device that has a reasonably reliable, always-on Internet connection. As such, we’re right about at the point where a service—the aforementioned ones, or perhaps some new one—can came along and say, “Oh hey! You know, instead of taking your iPod with you everywhere you go, why not just connect your phone to our service? We have every song in recorded history in our database (“Cloud”), and they’re all yours, provided you pay us $15 per month. Think about it: every song ever, in the palm of your hands. That sure beats listening to the same MP3s over and over again, right?!” That’s a best case scenario, of course. While Rhapsody told me the record labels are now much easier to deal with than they were in the past—there’s still a few music executives yelling, “Go away, Internet!”—, we’re still a little bit away from having Everything Ever at our fingertips. On the technical side of things, that also assumes that our Internet connections are, indeed, sound as a pound (aside: I think that phrase needs to be updated!), something that any iPhone-using SXSW attendee will tell you isn’t exactly the case just yet.

But, for the purposes of this here article, let’s assume that all those problems have been solved. Let’s assume that the mobile Internet is fast, reliable and affordable, and that the record labels have opened up their vaults for placement in The Cloud; no technical issues remain. The only thing we have to confront now is the consumer and her listening habits: will they change? Have they already changed? Does Little Stacy, who’s currently in junior high and listens to music via YouTube and Imeem, portend an adult who won’t think of music in terms of CDs and MP3s, but of something that’s “just there,” for lack of a better term? She won’t have a personal music library, in the form of vinyl, CDs, MP3s, FLACs, or whatever; The Cloud will be her library, on which everything ever recorded will reside. The notion of “not having that album” will be totally alien to her; she has everything, always. No, she doesn’t own any of it—it belongs to the record labels, by way of your Rhapsody and Spotify (or whatever)—but it’s always available to her wherever she goes, so why should she care whether or not she “owns” it? Ownership, in this scenario, will become an antiquated concept, no longer applicable to current conditions, and Adult Stacy wouldn’t have it any other way. Nothing’s stopping Stacy from buying a physical copy of an album on some future whiz-bang format, which includes a super-de-dooper high quality copy of the album, but it would be the exception and not the rule. People still go camping (“roughing it”) even though they have fully decorated master bedrooms they can sleep in.

But that describes Little Stacy, our hastily invented character who’s currently in junior high; at most she’s a 13-year-old. What about Big Steve, who’s 15 years out of college and works in a spiffy office downtown? He still owns his music—in fact, he’s probably just getting used to buying songs off iTunes and the like—and the idea of songs “being there” is sorta weird to him. What if they’re not there? (Big Steve is a glass-half-empty kind of guy; blame the recession.) And even if the songs were there, why should he pay a monthly fee for an entire library of music he’ll never listen to? How is that better than having an iPod filled with only the songs he likes—he loves Danzig—without any garbage pop music getting in the way? A cynic could say, well, long-term, Big Steve is irrelevant, since he doesn’t buy new music anyway, and besides, it’s his kids whom the music industry will be targeting in a few years anyway. Let him “own” all the music he wants, since it’s only a matter of time till he isn’t even on the music industry’s radar. Of course, that completely ignores the fact that, with his fancy corner office, Big Steve has more disposable income to throw at the music industry (and the services we’ve been talking about) than Little Stacy ever will while she’s growing up. To ignore Big Steve, and all the dollar signs he represents, would be foolish. That’s not to say that Big Steve can’t still buy CDs and MP3s, of course, but the question here is whether or not people, in the future, will be comfortable with not owning music. And as people like Little Stacy use the aforementioned services, they’ll no doubt get used to it; it’ll be just another thing they do, like sending thousands of text messages per month or spending hours upon hours on Facebook.

Specific to Rhapsody, yes, you can now buy MP3s from their online store. (Even disruptive technologies and companies like to hedge their bets.) Whether or not that’s the way forward, or merely something done to placate the Big Steves of the world, is what we’re trying to determine. My guess? I hope they have house music in The Cloud.

Original post

Comments

[waf76:]

so what do u listen to when you're on a 8 hour flight?

Mar 23 02:52 PM

[Hayweed:]

Why would I want to pay $15 for me $15 for my wife and $15 per child per month forever. Once they start each year then each year they will raise it slightly. This is a no go.

Reason I never bought Xm or Sirius is that it is a per car tax. You have 5 cars then you pay five bills.

On the music, they will then want all kinds of add on fees $15 for your phone, extra $2 per ipod, $5 per vehicle, $5 for each computer. Never will work.

Just look at dvds. If I buy it why can't I load it onto all of my devices that I own in my household. Thus I can put it in itunes and stream it to my tv, put it on an ipod to watch at the gym, watch it on a laptop on flight or use an ipod/iphone to hook it up to the car dvd player. Right now you would have to hack the dvd or buy it digitally.

Mar 23 04:52 PM

[Jon T:]

Subscription music has been tried and tried and tried. No-one has made a go of it.

It might be fine for the odd foray into discovering new music, but definitely not for the music you love.

I'm also tired of subscriptions here there and everywhere. I've been cancelling them and prefer to pay once and be done with it.

Mar 24 09:07 AM

[peter02l:]

I've got 5 in my family. $75 a month? iTunes is way less expensive and we can take our music everywhere.

Mar 24 10:09 AM

[winindthedust:]

For music, this is a NO GO.

For video, that's a different story, however the model will NOT be subscription. Rather, people will be willing to "store" their movie in the cloud, that they purchased. It's already stored in the cloud anyway, as they bought it as a download. Video takes so much space, and fast internet is becoming ubiquitous.

The main reason rentals are more popular is three things:
Cheaper
Storage
Usually watch once

Some major things that Apple will introduce, that will spur movie and TV show purchases:

Once you buy, iTunes will keep track of your purchases, and you can re-download at any time to an authorized device. This will be major, as people will not have to worry about storage and back-up. This is a big reason people don't purchase on line video. TV shows are already cheap enough, and people like the a-la-carte purchasing of content. To be able to purchase, then have access via the cloud to content you OWN will be compelling.

Rent-to-own. People may not want to buy a movie, until they've seen it. Having iTunes keep track of rentals for a period of time in a rent to own model will indeed be compelling. There is a lot of ways they could go with this... the rent to own could be per movie, that is, rent the movie, and if you decide to buy it, the rental price is applied to the purchase price. Or, they could apply all rentals to the purchase price of any movie... that would be very easy, very cool, and give nice choice, as well as spur purchases of Apple products. Think about it, if you rent a movie, and those totals can be applied to the purchase of any movie in the store? Nice. Of course, there is the problem of multiple studios, and compensation... this would be complicated if they had to apply it on a per studio basis, therefore, I only see the rent-to-own model on a per movie basis being viable at first with studios warming to the latter idea later.

With Apple TV, IPv6, and Wide Area Bonjour, Apple will allow remote connectivity from stored content on the Apple TV & the cloud, to be streamed to other devices. On a trip to abroad, and you want to watch a TV show that's downloaded to Apple TV at home on your iPod touch or friends Apple TV? Enter iTunes password, and watch as streamed video, that auto scales to the internet connection. This solves ownership problems, as the content is not stored, but streamed, and therefore can be watched from any device.

With faster chips introduced in iPod touch & iPhone, direct purchase to these devices will become a reality. Once this happens, these devices will increasingly become "mobile Apple TV's". With the hardware now opened up to third parties, it's easy to imagine popping over to a friends house, and using their HD screen for viewing content from your pocket media device, seamless and on the fly. Yes, you already can do this, but it will be even more convenient with powerful choice and options.

All TV's will start adding CHEAP Bluetooth to their sets. They will do this, and all have a Universal Remote App in the App store. Think about the implications there... and don't stop at TV's.

Mar 24 10:17 AM

[Joe Public:]

Heyweed and Peter02I make excellent points. All music subscription services so far recognize only the individual person (or sometimes the individual device), but not the couple or the family, as the subscribing unit, making the service pretty expensive for some. This is unlike cable TV, a successful subscription model, which recognizes the household as the unit customer.

Nicholas, the technical problems that you would like to assume have been solved are a significant impediment to more widespread adoption of of cloud music. I understand you want to examine other aspects of the problem, but if the technical issues were magically gone, a lot more people, young and old alike, would be content to get their music from the cloud. The technical issues are are more numerous and are a lot less solved in the real world than you think they are, I believe.

But putting technical issues aside, there are still matters of trust and dependability. It would be stupid to assume that the company you buy your music service from will always be there. We have already seen several music services disappear, Yahoo Music Unlimited for one. If you put a lot of work into your music profile and organization, I guarantee you will be very unhappy when you have to start over from scratch when your old provider goes belly up.

Another factor, which you give some mention to, is the content owner. Going back again to Yahoo Music Unlimited as an example which which I am familiar, users found that record labels would UN-license their content from time to time. Your favorite artist might all of a sudden become unavailable simply because of a contract issue with the label, or simply on the whim of the label.

I think cloud music will continue to grow, but there remain many populations for whom the current business models have little appeal. I also think subscription (rental) music and music ownership will co-exist for quite some time, unless one or the other is made very unattractive by regulation, taxation, etc.

Mar 24 06:43 PM

[88keys:]

You load up the music you want onto your mp3 player prior to the flight and start listening. Rhapsody enables this today, you just have to synch your device to the service once a month via the PC or directly if you have a wifi-enabled device to validate that you're still a paying subscriber. In addition to gigs of albums, tracks and playlists I can put on the device, I can also update my radio channels, which collectively give me plenty of tunes for any length flight.

On Mar 23 02:52 PM waf76 wrote:

> so what do u listen to when you're on a 8 hour flight?

Apr 09 03:45 PM

[88keys:]

Music is personal. The services will need to allow for subscription by household but support individual profiles within a household. I don't want my Rhapsody recommendations clouded by the rest of my family's listening habits (this is also a problem with iTunes, Netflix and Amazon unless you set up multiple accounts). As Joe Public and others mention, enabling profiles means the labels will have to ease their current restrictions. Throw out the current model that restricts the number of devices or PCs. Instead, pivot to allowing a certain number of simultaneous users, regardless of PC, geo-location, device, etc.


On Mar 24 06:43 PM Joe Public wrote:

> Heyweed and Peter02I make excellent points. All music subscription
> services so far recognize only the individual person (or sometimes
> the individual device), but not the couple or the family, as the
> subscribing unit, making the service pretty expensive for some. This
> is unlike cable TV, a successful subscription model, which recognizes
> the household as the unit customer.
>
> Nicholas, the technical problems that you would like to assume have
> been solved are a significant impediment to more widespread adoption
> of of cloud music. I understand you want to examine other aspects
> of the problem, but if the technical issues were magically gone,
> a lot more people, young and old alike, would be content to get their
> music from the cloud. The technical issues are are more numerous
> and are a lot less solved in the real world than you think they are,
> I believe.
>
> But putting technical issues aside, there are still matters of trust
> and dependability. It would be stupid to assume that the company
> you buy your music service from will always be there. We have already
> seen several music services disappear, Yahoo Music Unlimited for
> one. If you put a lot of work into your music profile and organization,
> I guarantee you will be very unhappy when you have to start over
> from scratch when your old provider goes belly up.
>
> Another factor, which you give some mention to, is the content owner.
> Going back again to Yahoo Music Unlimited as an example which which
> I am familiar, users found that record labels would UN-license their
> content from time to time. Your favorite artist might all of a sudden
> become unavailable simply because of a contract issue with the label,
> or simply on the whim of the label.
>
> I think cloud music will continue to grow, but there remain many
> populations for whom the current business models have little appeal.
> I also think subscription (rental) music and music ownership will
> co-exist for quite some time, unless one or the other is made very
> unattractive by regulation, taxation, etc.

Apr 09 03:55 PM