“One thing is for sure,” declared an influential American critic and record industry analyst, Bob Lefsetz, in a recent post on the topic of streaming music. “One service will dominate, it’s where we’ll all go, because we want to share, we don’t want to be left out.”
“Streaming music, it’s kind of like the moon race, everybody wants to get there first,” says Casey Rae, an adjunct professor at the University of Georgetown and a vice-president of the Future of Music Coalition, an advocacy group for musicians. “It seems like an open contest, but it’s really not.” The winner, Rae told Quartz, “is probably going to be a company that has other properties, that doesn’t need to depend on the streaming platform itself.”
A clearer picture of what Apple and Google are trying to achieve in streaming music should emerge in coming months. But Rae, of the Future of Music Coalition, says that the odds are already stacked in their favor, and not just because they can absorb the high costs of royalties. The standalone services “are the services that are the most vulnerable, because they’ve got licensing costs and you also have got ISPs trying to put caps on users and the whole net neutrality issue,” he explains.
What this means is that, owing to changes in US regulation, content companies may soon be forced to pay internet service providers extra to stream audio and video content to users without annoying time lags. That would put even more pressure on their margins.
If so, the streaming music business (or at least the on-demand form) may well be destined to become a loss-leader for other, more lucrative business activities, Rae says. And it wouldn’t be the first time music has been used this way. Rae points out that in the days of CDs, retail electronics chains like Best Buy sold albums at a discount to get customers in the door so they would buy cameras and music players.