Mobile music streaming rides on social boost

Smartphone ubiquity, and better social and music discovery experience result in booming mobile music streaming market despite online radio and free downloads, say market watchers.
Written by Jamie Yap, Contributor

Subscription-based mobile music streaming services will see a massive uptrend not just because of smartphone ubiquity, but also an enhanced social and music discovery experience they offer, say industry watchers. These factors, they add, give the paid service an edge over free music downloads and online radio.

An ABI Research report last month forecasted that mobile cloud-based streaming services would become globally mainstream by 2016, with more than 161 million paying subscribers. The market research firm attributed the phenomenon to the swell in smartphone ownership, and handsets increasingly functioning as listening devices.

Besides offering online music streams to computers, services such as Spotify and Rhapsody also offer streaming to mobile phones, but only to users who pay subscription fees. Sweden-based Spotify has one million paying subscribers across Europe. Rhapsody has 750,000 paying subscribers in the United States where it is based.

Aapo Markkanen, ABI industry analyst for consumer mobility and co-author of the report, told ZDNet Asia that the advantages of on-demand steaming over online radio--typically free of charge--are that users can freely pick or create their own playlists, receive song recommendations and share songs with friends. On top of that, they do not have to put up with advertising, he pointed out in an e-mail.

Mark Keeney, vice president of marketing at Rhapsody, pointed out in an e-mail that "online radio is great as it whets the consumer's appetite [with] music one wants to listen to, but there's no guarantee of when the track will play".

Similarly, Spotify spokesperson Sally Whatley said online radio only plays pre-selected songs, and does not offer the same experiences and services as music streaming. The former also lags in convenience and choice, she added.

Mobility heightens social experience
In an e-mail interview, Mark Little, principal analyst at Ovum, noted that with tech giants such as Sony, Apple and Google also eyeing the online music streaming market, players in the space need to focus on content and experience in order to build their subscriber base and differentiate themselves from rivals.

Hence, "music discovery will be crucial in this respect in order to navigate music collections with millions of songs," he said.

Rhapsody's Keeney added that "mobile devices have made music ubiquitous in people's lives in a way it never was before".

"The fact that the smartphone is constantly at a person's side and ready to beam a music track from the cloud eliminates several barriers to consuming music," he said. Users, he added, do not just want to access the music they have, "they want to access what's new or what a friend is listening to".

Keeney noted: "The social implications of mobile should not be ignored. People love to share and discover new music with friends, and a phone with a music streaming subscription is the key to unlocking that social currency."

According to Spotify's Whatley, music streaming services are popular because they enable interaction. Spotify, she said, gives users complete control of their music enjoyment--they can easily compile a playlist, or tweet and post links to their favorite tracks or playlists to share with friends--and helps one discover new music.

"Sharing music has become easier and more social than ever," she added.

Edge over free downloads
Asked if rampant piracy threatens music streaming services, Whatley acknowledged that "piracy continues to be music's biggest problem". However, she noted that since online music streaming offers users the "freedom to choose whatever music they want, whenever and wherever they want it, obtaining music illegally is more of a hassle compared than the legal alternative".

With the streaming model, users also "do away with all the troubles that music piracy poses, from poor quality audio to computer viruses", she pointed out, adding she was confident that people will continue to use Spotify's service.

In addition, subscribers of mobile music streaming can download their music and playlists to their mobile devices and listen to them offline, avoiding data overkill and expensive phone bills, said Whatley.

In addition, ABI analyst Markkanen noted that music downloads, whether free or paid, require storage space and users may find it a hassle to have to transfer the files from their PCs to the portable players.

Music industry can benefit
Rhapsody's Keeney disagreed that music streaming via mobile devices would harm the music business, including record labels and music artists.

"Mobile is already proving to be extremely beneficial to the music industry", he said, citing the significant reduction in piracy as an advantageous outcome, he said.

Subscription music also guarantees that the "artistes, publishers and licensors get paid and paid expediently as we are logging every single play", he highlighted.

Markkanen from ABI and Ovum's Little both concurred.

Little noted that a growing demand for any form of music consumption benefits the music industry" as long as industry players can develop compelling business models. These include revenues from licenses and royalties generated from subscription and ad-supported services, he said.

ABI's Markkanen emphasized that in some countries, mobile music streaming may be recording labels' and artistes' "only shot to monetize their content. He also argued that cloud-based business models lower the barriers of entry to the music business--aspiring new artistes, for instance, do not have to deal with all the "traditional gatekeepers" to market their music globally.

"I seriously believe the cloud can democratize the value chain", he said.

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