How Music Streaming Threatens ITunes' Empire
Apple's iTunes transformed music downloading, but if streaming companies have their way, buying tracks will be a thing of the past.
Most of the top-selling albums on iTunes cost $10. But for the same price, users can subscribe for one month to Spotify, Rdio or Rhapsody, giving them access to millions of songs on their computer and mobile device. The all-you-can-eat services, particularly Spotify, have seen rapid growth in the past few months, as more customers stop downloading and begin streaming their favorite music.
The growth of music streamers, however, is threatening to upset the current standard for music consumption: Apple's iTunes Store. Users downloaded the program hundreds of millions of times, and Apple has built an empire selling devices that play the music it offers. Now, music streaming services are knocking on the door to become the users' first alternative to iTunes.
ITunes: The House That Apple Built
Apple laid the ground work for the world of digital music when it launched iTunes in January 2001. The online store met with skepticism by major record labels, but as key players in the industry began to buy in, Apple's platform became a universal record store that anyone could visit from the comfort of their own homes. ITunes successfully monetized the digital distribution of music, creating a new standard for purchasing artists' singles and albums and forever changing the music industry. As a result, Apple became a major music industry power, and its iTunes platform has become a powerful distributor beyond music.
The Case for Streaming
Just as the music industry has come to terms with iTunes as the gateway to offer its product to users, streaming services are emerging as a worthy alternative to Apple's established model, and are quickly gaining steam with consumers.
Subscribing to a music streaming service like Spotify is the most affordable way to listen to as much music as possible. The company has deals with nearly every major record label, allowing it to make music available the day an artist's CD hits store shelves.
If a user is a fan of three different bands all releasing new albums on the same day, downloading each CD from iTunes could cost $30 or more. Members of a streaming service could listen to all the new releases from a single day on an endless loop if they want, and the monthly bill would still be the same: $10.
One of the major knocks on music streamers in the past has been that if there is no Internet connection, there's no music. For example, a user depending on the iPhone's Spotify app to play their favorite music on a road trip is out of luck if they suddenly enter a dead zone and lose signal. However, each of the major streamers have introduced new features that allow subscribers to save their favorite music for offline use, so customers can play their favorite music no matter where they are.
Another big advantage to going with a music streamer is these services cut the need for storage capacity on a computer or mobile device. If a customer only has a 16-gigabyte smartphone, they may be forced to pick what songs from their music library they want to take with them. Music streamers house of all the music on their own servers, allowing users to keep their devices free of any locally stored music files.
The Case for Downloading
Sure, being able to stream all that music is convenient, but the anti-streamer could counter with the same argument that keeps many people from ever leasing a car. At the end of a yearly subscription to Spotify, what is the customer left with? The answer is nothing. The music streamed over their devices does not belong to them; it's borrowed. Purchasing an album on iTunes is real ownership. Once a customer buys an album, it exists on their hard drive forever and can be burned on to a CD or copied to an mp3 player.
Downloading music also guarantees a better listening experience. The quality of music streamers can reach 320-kilobytes per second, but that only happens when a user's Internet connection is optimal. Customers on the move are likely to fall victim to changing data speeds, which will greatly impact the quality of a listener's audio. In addition to better sound quality, users that stick to downloading have a larger musical selection. Streaming services offer millions of songs, but iTunes is the largest collection of online music, making it the only place to get several popular new and cataloged albums.
Room for Both
As streaming companies continue to find their place in the music industry and flesh out the amount of content they offer, there is a place for them to coexist with online stores like iTunes. Due to the incredible selection in Apple's music store, and the money the company has to keep certain things exclusive to its platform, iTunes will always have material that isn't in online streaming services.
There will also always be customers that prefer to purchase and own their music as opposed to streaming it from a company's servers, but any person getting their music off of Spotify, Rhapsody or Rdio is a person who likely isn't buying that same music on iTunes. Apple has enjoyed incredible revenues and profits from being the top destination for music online.
However, that may change as music streaming subscription services gain steam. Record labels have grown wary of the control Apple exerts over the digital music distribution platform and could welcome new players in the business. Still reeling from the transition to digital, music industry powers could welcome the opportunity to negotiate with streaming services, especially with the possibility of hammering out agreements that work in their favor.
Apple established a new industry model with iTunes and perfected it to a point that no one can duplicate. No one is saying that online streamers duplicate what iTunes does, but they represent a new way to do things all together, and that may be even more dangerous in the future. ♦
Categories: Media Mind