Online music services

Online music services reinvented the ways in which the people access music. Music fans worldwide have embraced them for their ease of use, wide selection, and convenience. In the first years of the twenty-first century, when online music services were in their early stages of development, the music business was slow to adapt to them, fearing a loss of control over music content and its traditional sales model. By the end of the 2000s and inot the 2020s, however, sales figures and popular culture proved that digital music would become the central industry sales model and the major revenue source for music business entities.

In the late 1990s, the consumer market began to demonstrate an interest in digital music files. Napster, an illegal file-sharing program, was the primary means of acquisition. Besides "ripping" tracks from CDs that they owned, consumers had few legal means to obtain files for use on early digital media players. Faced with decreasing sales and limited means to fight online piracy, record labels were forced to adapt to a business model that centered on an entirely new method of music consumption.

Early Years

One of the earliest online music services was eMusic, which offered legal music downloads from artists not under contract with major music labels. For a monthly fee, users could download thirty songs from the site’s catalog. Following the shutdown of Napster in June 2001, other Internet services began to appear. In December 2001, listen.com launched the music streaming service Rhapsody. (Streaming refers to playing media, including music, over the Internet without downloading an actual file.) For a monthly fee of $5.95, Rhapsody users gained unlimited access to the company’s catalog of independent artists and recording labels.

In 2002, Universal Music Group and Sony Music Entertainment unveiled Pressplay, which offered its users access to a library composed of artists from the companies’ respective record labels, as well as songs from British-based EMI’s catalog. Like eMusic, the service offered the ability to cache (store) up to thirty songs per month and to burn them onto CDs. The songs could not be transferred to digital media players, however, and when users cancelled their subscriptions, they lost the ability to listen to their cached songs. The service was discontinued after being acquired by the software company Roxio in 2003.

The Internet media company RealNetworks released RealOne Music (also known as MusicNet) in January 2002. RealOne Music featured songs and albums from BMG, Warner Music Group, and EMI. Subscribers were granted access to one hundred streams per month as well as the ability to have one hundred songs cached onto their computers at any given time, but transfer to digital players was restricted.

In 2002, Rhapsody began expanding its collection to include tracks from major record companies. By the end of June, the service featured music from all five major labels. Although major labels had already been making sections of their catalogs available to online music services, very few popular bands and performers were involved in the music-streaming venue.

In August of 2002, Pressplay retooled its subscription plans and introduced a tier that allowed users to download ten tracks per month. Unlike the cached tracks available from other services, these song files were purchased by the consumer and available to them even after a subscription cancellation. Songs downloaded from Pressplay could also be transferred to digital music players.

iTunes and Other Models

In April 2003, Apple launched the iTunes Music Store. Unlike other services, iTunes was not subscription based; instead, Apple sold individual downloads of songs and albums to users, who could then transfer their purchases to their iPods, Apple’s line of digital music players. Notably, songs purchased from the service were incompatible with other companies’ digital media players. Response to the store was overwhelming, and Apple sold over 250,000 songs during iTunes’ first full day of operation.

RealNetworks purchased Rhapsody in August 2003, discontinuing RealOne Audio; later that year, Roxio—the company responsible for the software behind Pressplay—purchased Universal and Sony’s stakes in the company and relaunched it under the Napster brand, which they had also acquired. Both services allowed users to purchase permanent downloads of single songs.

While most services charged for subscriptions or individual downloads, some companies attempted to direct attention from piracy with free, ad-supplemented music services. One of best-known examples of free streaming online music is Pandora Radio, which was launched in 2000. Pandora users input an artist or genre they wanted to hear, and the application plays songs it determines are similar to the selection. The free version of Pandora Radio features advertisements and imposes limits on how many times a user can skip a song. These limitations are lifted for users who pay for a Pandora subscription.

Slacker Radio, introduced in 2007, took a similar approach. Like Pandora Radio, Slacker Radio allows nonpaying users to create stations based around artists or songs. However, Slacker Radio also features a number of curated stations; instead of playing songs based on the genre or artist of a "seed" song, stations feature songs chosen by DJs or people in the music industry. Like Pandora, Slacker Radio also uses track selection limitations and advertisements on its free service.

Several online music services developed during the 2000s have since folded. These include Ruckus Network, GarageBand.com, BitPass, Grooveshark, Sony Connect, and Yahoo! Music Unlimited. Apple's iTunes Store eventually came to dominate the "online music store model," in which albums or songs are purchased and downloaded; competitors included Amazon Music, eMusic, and various iterations of Microsoft's Windows online stores. By the early 2020s, Spotify was the largest music streaming service in the world, with a 30.6 perecent market share and more than 200 million subscribers as of 2022.

Criticisms and Digital Rights Management (DRM)

Many music consumers initially reacted apprehensively to legal online music services, as the restrictions placed on them seemed too strict, especially when compared to the unlimited free music offered by pirate music websites and services. At the same time, music business companies scrambled to make sure their intellectual property rights and revenue stream were protected. In 2004, Microsoft introduced PlaysForSure, a digital rights management (DRM) implementation that allowed users to freely cache and transfer music to certified devices. PlaysForSure prevented users from keeping the music after their subscriptions expired, transferring music to unauthorized devices or users, and burning songs to CDs. Services such as Rhapsody and the revamped Napster abandoned their first-party DRM solutions in favor of the more accessible PlaysForSure. In response, hackers released software that removed the DRM from cached files, allowing them to be shared and played without restrictions.

Apple’s own DRM system, FairPlay, incorporated similar user restrictions, though it was aimed more specifically at preventing piracy than limiting what a user could do with downloaded files. Users were allowed to burn any track they purchased to a CD as many times as they wanted, songs could be transferred to as many iPods as had been authorized by the user, and up to five computers could be authorized to play purchased songs. Despite the more user-friendly implementation, FairPlay still drew criticism. In response, Apple removed the DRM from EMI’s songs in 2007 and from all music files sold in the store in 2009. From that point on, any song purchased from iTunes could be played on any compatible digital music device.

Meanwhile, artist availability remained a routine complaint on the part of music consumers throughout the 2000s. High-profiles artists such as AC/DC, Led Zeppelin, Pink Floyd, and the Beatles were not available on early legal online music services, usually due to licensing and royalty disputes. This changed when purchase-driven services such as the iTunes Music Store debuted, though many major artists were frequently absent from subsequent subscription-based services. In November 2010, Apple and EMI announced that the Beatles' catalog would become available on iTunes.

Impact and the Shift to Streaming Services

Online music services have supplanted the traditional music consumption model that involved consumers purchasing physical copies of artist’s work at physical stores. Perhaps in response to the uncertain and often chaotic early days of digital music, however, sales of vinyl records increased in the late 2000s. This trend can also be linked to a rise in nostalgia and appreciation for smaller-scale, artisanal goods, in contrast to the intangible nature of digital music. Some music fans also claim that digital music files do not sound as good as analog vinyl records, or even CDs. Still, these factors have not halted the explosive growth of online music. Although large recording labels continued to make compact discs available, digital music has become the music industry’s core media, led by Apple’s iTunes Store.

Yet even as iTunes remained dominant in the 2010s, the rapid pace of innovation on the Internet sparked a wave of evolution within the world of online music services. In general, the market shifted away from file downloads and toward higher-quality streaming services. Streaming was made more practical and attractive by the increasing ubiquity of wireless Internet access and mobile devices, as well as industry efforts to gain rights to an ever-increasing amount of music. Many consumers appreciated the convenience of being able to access huge catalogs of songs on any Internet-enabled device, rather than have to purchase and sync personal collections across a variety of devices.

The music streaming service Spotify, based in Sweden, launched in the United States in 2011, with a free ad-supported version as well as a subscription-based premium service. Unlike other ad-based services, it allowed users to select specific songs or albums on demand. Other services launched in the 2010s, such as Rdio and MOG, offered similar features, which proved to be a turning point for the popularity of streaming. In 2011, Apple, Google, and Amazon all introduced services that allow users to upload their music—regardless of where or how it was obtained—to a central server (referred to as "the cloud") and stream or download music to other devices. Amazon’s and Apple’s offerings charged a fee, while Google’s was as a free service with a 20,000-song limit. In 2015, Apple reorganized its offerings to create Apple Music, a subscription-based streaming service offering close integration with iTunes and various Apple products, such as iPods and iPhones. It quickly became a major market player. Another popular subscription streaming service was Tidal, launched in 2014 with the backing of artist and producer Jay Z. It and similar services competed with large players like Apple Music and Spotify by highlighting features such as better sound quality and exclusive rights to certain music, as well as claiming to provide better compensation to artists whose music was streamed.

As the world of online music services continues to evolve, the fiscal side of the music business continues to face challenges as illegal pirate Internet networks and file sharing software provide unlimited, free music. Concerns also remains regarding issues like the fair compensation of artists represented on streaming sites. However, the success of digital music shows that consumers are still willing to pay for high quality content, whether in the form of downloaded files or through online streaming. Advancing technology will likely continue to shape the market and upend established music industry trends as long as people continue to listen to music.

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