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Celestial Jukebox: Free Streams Or Pipe Dreams?

6th May 2008 @ 7:30 pm - 10:00 pm

Venue: The Basement, PRS for Music, Copyright House

TOPIC:

It may be one of the web 2.0 buzzwords we love to hate, but the ‘Celestial Jukebox’ has always represented the natural conclusion of the music industry’s blue sky thinking; a WiFi-liberated paradise where music lovers enjoy what they want, where they want, safe in the knowledge that creators and rights-holders are being compensated. This hypothetical scenario, in which music is streamed direct to the listener from a remote location, would represent a fundamental shift in the way fans consume music: a transition away from the principle of ownership (e.g. vinyl, CD, mp3) towards a subscription broadcast model, in which all is accessed and nothing is actually possessed. It’s a compelling vision for fans and suits alike.

Well, the end of the rainbow might be closer than you think (although the size of the accompanying pot of gold is another matter entirely). On-demand (OD) streaming services have of course been with us for some time, with Rhapsody and Napster providing the best examples of the OD streaming ‘first wave’. Both services have their limitations (free versions typically have streaming caps, premium versions aren’t cheap, catalogues are adequate but not spectacular), and with Rhapsody still unavailable outside the US, Napster was, for the longest time, the only real OD streaming option for UK music fans.

This is however no longer the case. Last.fm’s recently announced free OD full-track streaming service (currently undergoing public testing and with individual tracks limited to three streams per user), promises a fully-fledged, unlimited service sometime over the coming months, while American music social network imeem has quietly broken new ground by striking ad-funded OD streaming deals with all four majors and a handful of indies.  Given the success of Last.fm’s previous offerings, it wouldn’t be unreasonable to expect a substantial uptake – especially if they get the price right.

The company are introducing a subscription to cover the licence fee, however the jury is out as to whether the service will popularise on-demand streaming, or be scuppered by the ‘freetard’ philosophy that permeates much of the user base of such services. Last.fm’s large UK userbase and innovative networking features may count for little if free services like imeem and We7 can gain traction, and choosing between free and subscription for comparable services will be a no-brainer for younger music fans.

This has led MOG and other new social networking services to argue for radically slashing licence fees in order to facilitate ad-funded, on-demand streaming. The industry would no doubt like to see growth in music social networking, but an obvious tension exists between rightsholders (who strive to uphold the value of music) and start-up networking / streaming services (who argue for cheap licences). Should the music industry offer discounted licenses, or should such companies accept that they need to mature their revenue streams before they can use music to drive their traffic (and valuations)? Most start-ups operate at a loss in their formative years, and recent deals with the likes of YouTube, Zune, Nokia and imeem suggest a raft of new, more attractive licensing options (from cash per device to equity).

If someone can get the consumer proposition right, the future for OD streaming services looks bright. A recent tie-in between customisable net radio types Slacker and Last.fm (last.Slacker – allows scrobbling of radio streams) suggests the streaming giant might enter the portables market via the backdoor. Slacker’s serially under-hyped portable player, which streams bespoke stations via WiFi and is attractively priced at the $200 mark, is crying out for incorporation of Last.fm’s OD streaming service. Could a credible portable streaming device such as this knock the ipod of its perch once and for all? Will Apple trump these young pretenders by creating a miniature, streaming-only iPod, or is the iTunes music sales model too great a prize for them to give up?

At what level of return will rightsholders be happy to license a new model with the potential to overtake all other revenue streams (physical, single track download and subscription)? If on-demand streaming IS the future (or at least a large part of it), then will the potential ubiquity of such services compensate for weaker ‘per track’ returns? Or will cost and technological issues slow the roll-out of WiMax (a widespread, interconnected network of WiFi hotspots) sufficiently so that the downloads/portables market remains profitable for years to come?

Can on-demand streaming ever fulfil the celestial jukebox fantasist’s dream to become the predominant method of mass music consumption?

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