Without going into tremendous detail, a quick history of digital music and consumer usage patterns is as follows:
- Early 1990s: advanced computer users first start using MP3 technology to achieve between 5:1 and 15:1 compression of music from CDs onto PC hard disk drives
- Mid-to-late 1990s: the masses of Internet users rip (or record) their first CD to their PC
- 1999: The Diamond Rio PMP-300 portable MP3 player is launched
- 2000-1: Roughly 80 million people around the world “share” MP3 files using Napster 1.0, which allowed people to easily find and download music. Napster gets sued into oblivion
- 2002-3: The first legitimate MP3 streaming services are launched, with low adoption rates
- 2003-4: RealNetworks buys Rhapsody, iTunes launches, MSN Music launches, Napster 2.0 launches. Apple announces the 250 millionth download. The 4th generation iPod ships, with Apple retaining 92% market share of hard-drive MP3 players. Rhapsody’s music collection is almost 1 million tracks, available to over a half a million subscribers.
There’s a lot more to it, some interesting, some not, but it is safe to say that consumers are trending toward using the Internet as a reliable source for discovering and acquiring music. Both legal and questionable methods are alive, all to varying degrees of success. Fundamentally, the forces in play are enabling access to music in (predominantly) one of two fashions: downloadable files and streaming files.
For this article, we present both perspectives, independent of each other. Dan McMinn, founder of dmp3 music discusses the importance of downloading and owning music files. Meanwhile, BigToe addresses the value of access to streaming music files. Please note that both articles were written without either author consulting with or reviewing the other’s work.
Streaming…
It is the Winter of 2005, and as I ponder the relative value of streaming versus download-based music services, I look at what usage models consumers have with music listening. Fundamentally, there are two places where people listen to music: places where they have Internet access, and placed where they do not. Yet.
Between WiFi and WiMax, UWB, and 3G, there are literally tens of billions of dollars being spent to give me access to the Internet from any location on (or, thanks to Lufthansa, above) Earth. The entire city of Philadelphia is getting free wireless (assuming Verizon can’t stop them). Even McDonald’s has hotspots now.
This means I have access, at (virtually) all times, to any available online music library. Several companies, past and present, have enabled me to stream my own music collection from the home. This of course presumes I have ripped my CDs, installed software, and am willing to leave a computer on at home at all times. And I am not.
The library I choose is Rhapsody. For $9.99 per month I have access to about a million tracks. 
What’s that? Didn’t hear that right? Yes, one meelleeon
To be fair, I have some eclectic music tastes, including a lot of world music
More importantly, I am always finding new music. A good friend of mine called me up and asked if I had heard of Jem (NOT truly outrageous!
Ooh, I forgot to mention the Rhapsody Radio service! Pick out 10 artists, and boom – instant radio station. If the station accidentally plays something I don’t like, I can even skip the track (up to about forty times per hour I believe). A huge differentiator for Rhapsody is the music programming is done by people who love music! It does not take much time browsing through the collections or listening to their radio stations to see (or hear) the difference between them and your local (ClearChannel) radio station, blasting out the hits they’re paid to play.
Let’s see where we are… I have an amazing selection of “on-demand” music and an even wider offering of radio services. Because I pay by the month, it doesn’t matter if I listen to a single track over and over again, or hear a full CD, or make a huge playlist that goes for hours. I can add anything I want to my virtual library, and I can listen at my leisure. On the other hand, with a download or track purchase model, I am effectively penalized should I select something I don’t really like. If I tire something, too bad – I paid for it, I ‘own’ it now.
So where’s the downside? The pesky iPod is out there messing it up for everyone. The iPod creates a model by which I need to own music, and I need access to it without an Internet connection. And with 4 million sales in Q4 of 2004, it doesn’t look like they are the pet rock of our generation. In fact, one might argue that an iPod is an essential element of living digitally. Okay, fine, so Rhapsody and the others will launch a download service to complement the streaming service. Done!
It was three years ago when I ripped my CD collection, and within a couple of months I had my Rhapsody (then listen.com) subscription. My MP3s are gathering virtual dust. I wonder if I’ll look back at My Music folder one day and reminisce.
Not Streaming…
In the past month or two, a lot of us have probably seen it – Napster’s launch of a huge campaign that essentially lays down the gauntlet, getting to the crux of the file-based vs. subscription-based digital music conundrum. Of course they give it their own spin, but the question Napster poses is certainly a valid one: If you are the slightest bit interested in building a digital music library, why would you in your right mind pay $.99 per song at iTunes when you can pay $15 per month to have unlimited access to Napster’s full library of 1,000,000 songs? Well, I’m here to tell you why.
First off, let it be said that there is most likely room in the market for both models. The reason for this is pretty much the same reason there is room for the rent vs. own concept to exist in any market. Depending on your personality type, combined with your desired financial and emotional investment, you’ll choose one or the other.
Before we talk about finance, personality and emotion, however, let’s talk about the brass tacks that get at the root of the file-based vs. subscription based models. File based models (fees are per song/album) allow the user full ownership of music files they have purchased and downloaded, with relatively unlimited restrictions on what they do with it. iTunes is currently the king of this world. Subscription-based models (one monthly rate) ‘stream’ music that the user can ‘rent’, select and customize, but use is much more restricted. Basically, you end up purchasing and downloading a song or album (on top of the subscription rate) if you want to have less restricted use. Rhapsody and Napster are currently the biggest players in the subscription world.
So maybe now you’re saying “OK, I see the pros and cons, and you get a bit more if you pay more… yada yada”. However what Rhapsody and Napster aren’t telling you is that they’ve locked grandma in the basement, she’s not well, and if she finds her way out there will be hell to pay, big time. So I will spare you that fate and share a few dirty little secrets:
With Napster and Rhapsody (as things currently stand), you can’t share your music with others (or make it mobile) easily and freely. With iTunes it’s pretty much anything, anyhow, anywhere. Yes, iTunes has protected files, but they stretch the term ‘fair use’ about as far as they can while still keeping the record companies happy. With Rhapsody and Napster, consolidating an existing mp3 library (maybe the CD collection that dmp3 Music has ripped for you?) into the set-up is either not allowed or is a pain, depending on which service you choose. So, you either lose easy access to the music you already own, or you lose track of what music you rent vs. what music you own. To top it off (and I think this is the real kicker), say you’re rolling merrily along with Rhapsody loving life that you’re paying $10 a month, you’ve built a huge kick-ass music library with tons of great playlists and… Whoomp! a better subscription service comes along. Maybe you decide you want to switch to iTunes or (even better), you want to switch to a Mac platform entirely. Maybe you just want to cancel your subscription so you don’t have to pay $10 a month FOREVER. Well, guess what? You can say bye-bye to all your music and all the work you’ve done to personalize it. With the file-based model, you may need to convert to another file format in order to go elsewhere but at least you keep your music. Finally, one look at the interface and usability of iTunes (smooth, silky, simple) vs. Rhapsody/Napster (cluttered, chaotic, clunky) should be enough in and of itself to make the choice pretty easy. I know, this isn’t supposed to be about iTunes vs. The Others but some things just need addressing.
In all truth though, it really comes back to the idea of rent vs. own. Do we ever really want to rent for the long term? Renting is something we do in the short term for a quick fix, and if it is long term it’s for something that has little emotional or personal attachment. Why should we think that music will be any different? In fact, music seems a least likely candidate for the rental model because of its highly personal, emotional nature. As one friend put it, signing up with Rhapsody “would be kind of like renting shoes”.
Is music important to your life? Is it something you are extremely passionate about? Do you set aside time to be with your music? Do you want control and freedom with it? Is it a style or personal statement for you? Are you more interested in quality than quantity? If the answer is yes to all of the above, then the file-base model is for you, pure and simple – you want to own your music, you want to do whatever the hell you want with it whenever you want, and you don’t mind paying a reasonable price for it. If music is important but not critical, maybe more of sidebar to your life than a soundtrack, the subscription model may work out just fine. But beware that you won’t be getting anything more than (at best) a glorified, personalized radio station.
