music and the cloud: is there a silver lining?

Megatrax CEO & Founder Ron Mendelsohn
Megatrax CEO & Founder Ron Mendelsohn

The music world is all abuzz over Apple’s anticipated launch of its iCloud service, which is expected to be has been formally announced today. This development, in addition to Pandora’s recent IPO filing, highlight the industry’s rapid shift towards cloud-based solutions.

Movement of content to the “cloud” is an inevitable outgrowth of the mobile revolution; as the number of mobile devices proliferates, it is vastly more convenient for users to access their content from a centralized Internet hub rather than trying to manage the data themselves.

Apple’s iCloud will purportedly allow users to store their content in the “cloud” and access it on any device (or at least any device within the Apple ecosystem). This pertains not just to music, but to movies, TV shows, photos and other media as well. While iCloud might prove superior to similar services recently introduced by Amazon and Google, these “cloud” solutions will ultimately fall short of the mark since they beg the key question: Why would anyone want to “store” anything if they can instantly stream whatever they desire on demand? Is not the whole notion of maintaining a personal collection of music and movies an antiquated concept once everything is available in the “cloud”?

Of course, Netflix has already figured this out and leapfrogged ahead of everyone else. The result has been a booming subscription business whose meteoric rise has directly paralleled the steady fall of DVD sales. Apple surely knows that cloud-based streaming is the future of media consumption, so don’t be surprised if this turns out to be the next big headline.

As for music, services such as Pandora, Rhapsody, Spotify, Rdio and others are already offering streaming music onpandora demand from the “cloud.”  These business models are not all identical; some are subscription-based, some are ad-based, some are “freemium” services.  But what they have in common is that they all offer consumers the freedom to access a vast selection of personalized music anywhere on multiple devices.

What does all this mean for the entertainment industry? The good news is that once all the pieces in this puzzle fall into place (including rights negotiations with the content owners), there will be less incentive for anyone to pirate music or movies. Why pirate movies when you can pay $7.99 per month for unlimited access to any film, plus personalized recommendations? In a world where content can be accessed anywhere, music and media become even more deeply woven into the fabric of our lives and hence become even more valuable. Another possible added benefit: more streaming and less downloading should theoretically translate into more performance income generated for songwriters and publishers since currently a stream is deemed to be a performance whereas a download is not.

Ten years from now, once all content is available seamlessly on demand in the “cloud”, we will look back at these days as the Wild West of the Internet. Rest assured, it will all be sorted out and music, movies and other premium content will emerge more indispensable and valuable than ever.

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