Fred Wilson has a post this morning about streaming audio services on the web. Fred’s point is that streaming music is changing how people listen to and discover music on the web and that this type of use will accelerate. And I agree with that. But some fundamental problems still exist with streaming music. For one the user experience will always be somewhat compromised as compared with getting data from your hard drive. It will get better over time but your connection speed is always going to be variable. However, more fundamental is the economics of streaming. As Fred points out, advertising will play a role here but that only helps the labels/artists get paid (and I am not sure this pencils out). However, the elephant in the room is your ISP. Right now all these streaming services do not have any agreements with the ISPs of the world. We already know that the ISPs are “shaping” bandwidth and if/when streaming becomes mainstream it will strain networks. Even worse from a bandwidth standpoint is that no network caching can really go on because in this new world of streaming everyone is getting a custom stream. So the networks will start to have issues and the ISPs have no economic incentive to play along. Now let’s move this to the mobile space and these network issues become even worse. The networks are even more tightly controlled and constrained (LTE/Wimax etc notwithstanding). In some ways constant streaming from large number of users will be a nightmare for mobile operators. Which brings me back to the user experience I touched upon in the beginning of the post. One of the things that made iTunes/iPod so successful was the user experience. It just worked as opposed to any number of pre-existing services and devices. It’s my contention that streaming will have a place in this new world but that I am not as bullish on it as Fred is because of the above issues. So if not streaming then what? Well, I believe trickling content to a hard drive will become a major delivery mechanism for content. It delivers a better user experience and the network economics make a lot more sense. In some ways that is already the model that iTunes uses but I think we will see it used in innovative ways (eg AppleTV).Now for the crystal ball gazing about Topspin media which Fred also talks about in his post. I am guessing that Topspin will try to connect artists more directly with buying public and thus bypassing the labels. This will have to rely on the internet to a large extent and will finally address the distribution issue in today’s music business model. It needs to happen and it’s way overdue. Peter and I both had a hand in democratizing music production and I am guessing that both Ian and Peter are eager to knock down this last barrier for artists. It will be cool and will have a bigger impact than streaming because every article about music on the internet will not be filled with a bunch of caveats about the labels and what they think. The labels will not be invited to the party and new business models will flourish. And that may be a bigger deal than MySpace’s music service because that service will be about lock-in just like every other music service on the net today.
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