Streaming audio content has shown to increase dramatically over the past years. Audio streaming is the process of obtaining audio content through a service involving an online network or Internet application. Spotify, Apple Music, Pandora, and Amazon Prime are the more recognizable OTT service providers for audio streaming. Today, more and more people are purchasing devices to access the Internet. Even though there are different variations for audio, music is one of the biggest reasons people stream the content from OTT service providers. The future looks bright for audio streaming consumers, but will that effect the music industry also? There are major advantages and disadvantages on how the audio streaming OTT service providers are taking over music industry.
1. Streaming Beats Downloading
Before streaming became a popular way for people to get audio, consumers had to download audio content from an online program. People are still able to download music today from OTT service providers like Apple Music or Amazon Prime. Audio streaming has shown to be more beneficial to users compared to downloading in terms of free trials and unlimited storage. One of the highest growing digital markets based on audio streaming revenues is in the Asia Pacific. For 2016, looking at the percentage of revenue that is calculated by the split of Asia Pacific or APAC digital music, we find that 53 percent of music revenue is generated from streaming the content and 28 percent is from downloading content. In 2017, the music revenue from streaming is estimated to increase to 61 percent and downloading will decrease to 22 percent.
One of the reasons people are starting to stream audio is because of the free trials and free subscriptions. Spotify and Amazon Prime are both OTT providers that allow users a 30-day trial. Apple Music offers a 3-month free trial for consumers. Giving free subscriptions not only lets a user stream audio from the OTT provider, but also it captures the user’s interest in purchasing a subscription.
Another reason people are streaming audio rather than downloading is because of the unlimited storage. “The biggest problem with storing digital music on your computer or external drive is the risk of the music library being corrupted, deleted, or mismanaged.” Not only does the storage space get smaller when downloading audio, but the content has to be backed up. With streaming, the user can store an unlimited amount of audio content on the application because it’s on an account through the OTT provider. Whether you are using a cell phone, laptop, or any other mobile device, the content you stream won’t be saved to the hard drive. In other words, it doesn’t affect data usage, it doesn’t impact storage space on an electronic device, and it doesn’t need to be backed up on the electronic device. The files that a user accesses through streaming is saved through an online network or media server.
2. Streaming within the Music Industry
Physical music sales decreased by 13 percent, while streaming music sales grew by 30 percent. Annual music sales for the entire industry have hovered around 7 billion for six years, down by half from the 1999 peak, according to RIAA data. Labels and artists are negotiating new contracts with YouTube and Spotify two of the largest purveyors of free music in the world, to try to capture some of that revenue. While sales from ad-supported, on-demand streaming grew 24 percent to 195 million in the first half of 2016. Pandora, the largest online radio service in the world, will also introduce a paid, on-demand service in 2017 and aims to convert 10 percent of its 78 million free users into paying customers by 2020.
1. Sound Quality, Lag Time, and Advertisements
One disadvantage to streaming music includes the audio quality which is not as high as MP3 files, though most listeners can barely tell the difference. Audio quality has been increasing with better bluetooth and Wi-Fi technology. Subscribing to a streaming music services means you never own the music you pay to listen to; however, you can pay for and download selected songs and albums from music cloud sites just as you would from the iTunes Music Store.
Another disadvantage behind streaming services is the potential lag time between the newest release and its appearance on the streaming site. Bands may choose to release music on a specific streaming site or solely through CD’s. Certain artists choose not to utilize Spotify or ITunes due to their revenue and royalties model of the streaming site.
Since advertisements are considered a disadvantage for streaming, it usually applies just to free trial periods. Most people that use OTT providers like Spotify or Pandora for free are always exposed to advertisements. Although some don’t mind the services that are ad supported in order to access the service for free, people are inclined to purchase subscriptions because of the advertisements. It may be a disadvantage to users that want to stream audio for free but it is good business for the OTT providers to drive people into buying subscriptions.
2. Wi-Fi Connection and Data Usage
Streaming audio is reliant on a strong Wi-Fi signal or a 3G access with a premium fee. Wi-Fi can be purchased through wireless phone carriers, but the fees for the excessive data use can become expensive. Not only do users pay for the streaming service but also the means to access it. It would be similar to purchasing a radio but also having to pay a monthly subscription for the music. There are still large portions of the United States that still do not have reliable Wi-Fi signal. People in these areas may rely on physical music, radio, or other sources for the music besides streaming.
In simple terms, you must always be connected to the Internet in order to use streaming services. Even if some people don’t mind using the data on their mobile device, the network connection for streaming has to be strong and fast enough to receive a signal or audio content. Otherwise, the result of acquiring any audio content might be insufficient for any user. This type of situation doesn’t happen often for most people; however, individuals that have issues with network connections will prefer downloading audio to permanently have the content on their mobile device.
Comparing Spotify, Apple Music, and Amazon Prime:
Taking the time and actually comparing different audio streaming services is very beneficial. There are a couple hidden advantages that some of the audio services provide, along with a couple hidden disadvantages. See the below table to compare Spotify, Apply Music, and Amazon Prime Music.
As you can see from the table, as much alike that each audio streaming services seem, they are also a lot different. Spotify is more user friendly and have more of the market share in the audio streaming industry since they have been around the longest. Apple Music has a great deal of exclusives which can bring listeners to their OTT audio streaming service. Amazon Prime can be the least expensive option if you are an Amazon Prime member or own an Amazon Echo. Every individual is different and will either prefer one OTT audio streaming service over the other. The problem the OTT audio streaming services have is how to use their competitive advantages over their competitors to make listeners join their service, or switch to their service
Audio streaming is quickly becoming the dominant force in the music industry but has yet to overtake physical music sales and other revenue streams. As new technology and new streaming services enter the market, the quality of the streaming media will increase and access to millions of songs will become easier and more inexpensive. Streaming sites will need to focus on expanding their customer base and fulfilling the needs of both customer and the artists. The music industry has been struggling to reach turn a profit in recent years due to an increase in music piracy and advent of free music services. This trend is reversing and the industry is showing positive growth and a healthy prospect for the future thanks to the advancement in streaming media technology and more competition within the streaming audio industry.