Rise of Music Streaming

Overview

Music streaming services offer vast libraries of songs and albums and allow subscribers to listen to anything in the collection by way of an Internet connection. Many of the services also allow a limited level of access at no charge, as a means of encouraging potential customers to try out the service before signing up as paid subscribers. Music streaming services are able to offer access to songs and albums through licensing agreements they make with the record labels that own the rights to those songs and albums. The music streaming services are permitted to share access to music with their subscribers, in exchange for monetary compensation paid to the music owners. Understanding how the music industry came to allow this sort of arrangement requires a review of how the industry has evolved since the late twentieth century (Lee, Chen, Huang & Liang, 2017).

Up until the late 1980s and early 1990s, the music industry was firmly under the control of record labels, most of which were large corporations or divisions of companies with other interests. Record labels would find and recruit musicians, record their music, and then market that music to consumers, who would purchase it on some type of physical medium, such as vinyl record albums, eight track tapes, audio cassettes, or compact discs. Those who purchased music were licensed to listen to it themselves or to sell the physical album, tape, or disc to others, but not to make copies. Despite these limitations on consumers' rights, it was common for people to copy music onto blank media, either to make it more portable, or to share it with friends. While such actions technically infringed the record labels' copyright, it would have been virtually impossible to stop, so little was done by record companies to prevent or prosecute individuals from this type of small-scale sharing (Sinclair & Tinson, 2017).

The music landscape began to change in the 1990s due to the emergence of the Internet in a form that was usable even by people without advanced knowledge of computers and to advances made in digital compression technology. When compact discs became common in the marketplace, this caused a shift from analog music storage (i.e., vinyl records and audio tapes) toward digital music storage (e.g., compact discs and audio files). With analog storage media, recording media captured music as ranges of sound going up and down in wavelike patterns. Copying music to and from analog media was of limited utility, because each time a copy was made, there was some physical wearing of the original physical medium, resulting in a deterioration in sound quality over the life of the master recording. Commercial copies of the master were slightly degraded reproductions of the original master, the quality of which depended on the limitations of the storage medium, which also deteriorated with use, introducing noise. Copying a commercial copy, usually onto magnetic tape in the form of audio cassettes, further degraded sound quality and added background noise. Compact discs changed this, because they stored information digitally, as a series of ones and zeroes. This meant that each time a compact disc was copied, the copy was flawless—one could listen to the original compact disc and the copy and there would be no way to distinguish the two. This made unauthorized sharing of music a much greater potential source of trouble for record labels, because if people could obtain perfect copies of music from friends, there would be no need to buy music themselves (Borja & Dieringer, 2016).

These issues were compounded tenfold by the rise of the Internet, a digital platform. With music available in digital form and the Internet available as a means of transmitting digital information, record labels would have faced a nightmare scenario, but for one factor—file size. The average compact disc could store about seven hundred megabytes of information, and a typical album would take up at least half of that space. Given the fact that Internet speeds at the time were a small fraction of what they became, sharing several hundred megabytes of information online was almost impossible and would take days or weeks even if it could be done. To the record companies' chagrin, however, this quickly changed. File compression software takes a digital file as input and transforms it according to compression algorithms so that it takes up less computer storage space. It does this by looking for patterns in the digital file and then coming up with what are essentially abbreviations for each pattern. Thus, if the pattern 0101001101101 is found to occur frequently in a file, then the compression software might translate this string of thirteen characters as Am9 (for example), thus reducing the amount of storage space needed from thirteen to three. The best-known compression software for audio files that emerged around this time is still in use: mp3. Mp3 software can reduce file sizes by factors of ten or more. This, coupled with ever-increasing Internet speeds, made online music sharing a reality that the music industry at last had to face (Hampton-Sosa, 2017).

Further Insights

Music piracy almost instantly became commonplace, once file compression and moderately fast Internet access became the norm. A wide variety of programs and protocols for sharing files emerged, and the music industry responded to each one by using legal action, or the threat thereof, to discourage people from sharing. Many of the early file sharing applications, such as Napster, Kazaa, and others, were also significant security risks for users, because they functioned by opening up the part of the user's computer where music was stored, so that it could be browsed by other users of the file sharing application. Even this limited, restricted form of access was sometimes enough for a determined hacker to take control of another person's computer, with devastating consequences. Still, there were many users who felt that this could not happen to them because they were too sophisticated in their knowledge of computer security. It was the mindset of this group that was the target of the music industry's legal actions (Werner, 2015). The industry worked with Internet service providers (ISPs) to identify people who were using file sharing software, and then filed lawsuits against these individuals. Often, the music industry would have designated employees use the file sharing networks, posing as ordinary users, in order to gather information about which users were sharing and what files were being shared.

Music industry lawsuits frequently alleged damages in the tens of thousands of dollars, even for sharing a single song, because they estimated the cost of producing and releasing the song, and then also estimated the lost revenue incurred because of all the people who downloaded the song instead of purchasing it legitimately. At first these lawsuits saw some success, and cases were widely reported in which a parent was suddenly liable for hundreds of thousands of dollars in damages because their child illegally downloaded music with the family computer. Gradually, however, courts became more skeptical of the record companies' claims about their financial losses, as well as the technologically questionable methods they used to connect an ISP customer's identity with a user account on a file sharing platform (Hagen, 2015).

What was needed at this time was a commitment by record labels to modernize their distribution methods and channels, so that their customers would not continue to flock to file sharing applications in order to obtain the music they wanted to hear, without the restrictions on usage that record companies had traditionally required through their use of digital rights management (DRM) software incorporated into the music they sold. People wanted to be able to buy individual songs instead of having to purchase an entire album only to listen to one song on the record. They also wanted to be able to buy a song once and listen to it on different computers and devices, without having to pay again and without having to go through complicated steps necessitated by DRM. However, this did not happen.

The music industry was too fearful that taking steps to adapt its offerings to customers' evolving expectations would open up the floodgates for music pirates and file sharers all over the world, leading to bankruptcy for record companies. This created a void in the music marketplace, an empty space that was unfilled by a product consumers actually desired (Pongnumkul & Motohashi, 2018).

Into this empty space stepped technology giants such as Apple and Google. These companies attempted to provide consumers with a means of interacting with their music in the way they wanted to. Both companies began offering what amounted to online storage options for legitimately acquired music. Users would import their music collections into these services and would then be able to access the music from any device that Google or Apple (or another such company) recognized. These services solved some issues that had long plagued music lovers—online storage and management, access from multiple devices—but not others. Music remained relatively expensive despite the huge technological advances that have made its production and distribution less resource-intensive. People wanted to listen to music anywhere and anytime, but who did not possess their own digital collection and did not have the resources to acquire one. This was a relatively large percentage of the music buying public, and it represented a demographic that continued to have significant incentives to engage in file sharing and piracy in order to obtain their music (Hagen, 2016).

In response to this persistent need, streaming music services emerged. These were launched by companies that arranged licensing and royalties with most major record labels and charged users subscription fees to have access to all of the music they wanted, all of the time. Streaming services collect the subscription fees from users and then makes payments to record companies based on how many times each company's music was streamed by users. While some free accounts are available, they have limited functionality or require users to listen to advertisements between songs, as a way of paying for the service.

Streaming services do not have every piece of music ever recorded, but their collections tend to be so large that for the average user, the selection is fairly comprehensive. This allows users to avoid having to spend time and money collecting music from their favorite artists, and simply start listening. If at any time they wish to cancel their subscription, they can do so. Rates are modest, usually about ten to fifteen dollars per month. According to Music Business Worldwide, 616.2 million people used music streaming services worldwide in 2022, up from 523 million in 2021. Spotify was the industry leader with 187.8 million users. An estimated 90 million Americans subscribed to a music streaming service.

Issues

Music streaming does not solve every problem, although it does what it is intended to do quite well. One issue is fairly obvious: Music streaming services are only as good as one's Internet connection, so in rural areas where mobile phone signals are weak or nonexistent, or in places where buildings, terrain, or other features interfere with signals, it can be difficult or impossible to use them. Some services compensate for this by allowing a limited amount of content to be downloaded to a mobile device, but in general this is discouraged since permitting too much downloaded content might encourage piracy or violate the licensing agreements between the streaming service and the record labels. Another disadvantage is that for those who come to rely on streaming music subscription services, if they find it necessary to stop paying their subscription, they will instantly lose access to their music, regardless of how long they have subscribed to the service. There is no feature that allows users to build up equity in the service so that they acquire perpetual rights to some content; it is an all or nothing proposition (Borja, Dieringer & Daw, 2015).

On the more positive side, streaming music services have some social interaction features that provide their users with benefits not available elsewhere. Most have options to play random music, and to allow users to either listen to each track or to skip over the ones they do not care for. Each time a user listens or skips, the streaming service remembers that preference and builds a profile for the user, which it can use in order to recommend new music that is likely to suit the user's taste. In this way, users can discover new music that they otherwise might not have ever encountered. Some services also make it possible for users to share songs and playlists with one another. Playlists, collections of songs that are assembled by users according to their tastes or for a particular purpose, such as a birthday party or wedding, serve much the same purpose as old-fashioned "mix-tapes," from the audio cassette era, and like mix-tapes, playlists and music sharing encourage people within the service's user community to listen to still more streaming content. To a lesser extent, some streaming services allow users to share their musical tastes on social media, although this tends to be limited to sharing lists of song titles rather than recordings of entire songs, for copyright reasons.

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