Learning about streaming, Part 2: ubiquitous streaming from the cloud

A few blog posts ago, I wrote about streaming and tried to clarify what this involves. One of the upcoming digital trends of 2011 is cloud-based streaming of music. Good examples of this new trend are Apple’s iCloud service and Amazon’s Cloud Drive, but also the likes of Spotify, Pandora and Google are now very active in this area (see overview below).

I’m sure that this field will further evolve in 2011 with existing providers solidifying this revenue stream and new providers jumping the bandwagon. These are some of the things that I have learned so far about music streaming:

The service – On-demand streaming is all about delivering tracks and albums, providing users with easy access to online music across a number of platforms (web, mobile). With the cloud component, there’s also the option of user storing all their music. Apple’s iCloud for instance scans all of user’s music (including digital downloads not through iTunes) and matches it with the music catalogue in the iTunes Store and automatically stores it in iCloud.
The business model – This kind service is either free (totally free or to an extent), supported by advertising or a paid-for model (with users subscribing to the service and providers offering basic and premium packages).
Changed consumer behaviour? – I guess the long-term success of music streaming will very much depend on whether consumers are happy to pay just for access to music (instead of downloading and owning the music). A recent US survey found that that more than half of respondents preferred to purchase music files online, the top way of consuming music.Only 13% of online music consumers preferred to pay for online streaming (see survey results below). Another recent survey indicated that streaming services discourages music purchasing, which is the kind behaviour that might well only apply to those converted to music streaming and access.

Main learning point: it will be interesting to see how providers of music streaming services will shape their business models to generate sustainable revenue from streaming. In terms of consumer uptake, will it be case of only select group of people willing to pay for streaming and the large majority of users to stick with free music (streaming)?

Profile of Select Cloud-Based Digital Music Services , 2011