Data just released by the music industry shows that on-demand music streaming has become the fastest growing part of the digital music market, with digital downloads showing their first ever year of decline in 2013. Martin Rigby, CEO of Psonar, assesses the change in music consumption that has been accelerating since the arrival of smartphones and ubiquitous access to wifi and mobile data networks.
The decade or so between the launch of iTunes in early 2001 and the download of the 25 billionth song from the iTunes store in February 2013 saw Apple become the behemoth of music retailers. It has an estimated 60% share of downloads and 24% share of all global music sales. Digital downloading became the de facto standard for recorded music consumption.
But there are disadvantages to downloading music. Firstly, there’s the investment of between 69p and 99p to purchase a song, and then the storage required to hold it. The size of a single MP3 music file is around 5MB. Furthermore, people's habits are changing, especially among the young (so-called 'digital natives') who have a much more transient engagement with content. They want to be able to locate a song, film or TV episode easily and then move onto something else, without the expense of downloading, or need for managing content. Mark Mulligan, author of the Music Industry Blog, christened this the new 'ephemeral' engagement with music.
For more affluent consumers, often workers in the growing knowledge industries of the developed world, the perfect solution to the problem of accessing music conveniently and affordably has been subscription streaming. At £120pa services like Deezer, Rhapsody/Napster, Rdio, Spotify and, shortly, Beats Music (part of the Dr Dre/Jimmy Iovine joint-venture behind the eponymous headphones) all offer unlimited access to an extensive catalogue of popular music on multiple user devices (mobile, tablet and PC). The user still has to pay for the cost of data transfer whilst streaming over mobile networks, but, with 4G being rolled out in all developed markets, those costs are tumbling.
The gap in the market is being able to meet the demand for streaming among those people who can't afford to, or won't, pay £120pa. For most young people worldwide, and many people in developing economies, subscription streaming is unaffordable. They can listen for free to internet radio, such as last.fm, or use the free Pandora or Spotify apps, but none of these options gives them complete freedom to play the tracks they want to play, when they want to play them. For example, Spotify’s free app interrupts user listening with advertisements.
Psonar is aiming to serve the disenfranchised majority of music fans who want access to on-demand streaming, but who cannot afford subscription streaming. For as little as 1p per play they can listen to the tracks they want, on a pay-as-you-go basis, buying small amounts of credit using a card or their mobile phone. It’s like having an enormous personal jukebox in the Cloud. Psonar is set to revolutionise affordable access to streaming music. If 2014 is the year that streaming comes of age then it will also be the year that Psonar extends its reach to the global mass of music fans, much in the same way that pre-pay SIMs revolutionised access to mobile phones in the 1990s.