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By:  Kyle S. Howatt

Published:  April 23, 2013

From Tangible to Intangible:  The Shift to “Ownership-Free” Music

The way we share and listen to our favorite music today is a lot different than how we shared and listened to our favorite music just a few short years ago.  We have been introduced to music subscription services, like Spotify and Pandora, which have opened the doors for an entirely new musical experience.  These services are based off of the concept of “live-streaming,” which is the notion that media is delivered to users as it happens.  In our case, music is the media being delivered.  This is a shift where we are moving away from owning physical hard copies of CD roms, music downloads, and albums, while moving towards ownership that lacks physical copies of any type.  Although the idea of not particularly “owning” music anymore may make some people uneasy, these new services offer us benefits that range from saving us memory on our electronic devices, to engaging us in far more social experiences than we ever thought were possible with something like music.

The shift in the music industry toward an “ownership-free” experience may not matter for younger people who are embracing the ongoing change.  However, it could matter for older generations of people who may feel that they are being cheated by subscribing to a service in which they own nothing.  In that way, there may be some opposition to the ongoing change in music distribution as older generations of people are not as likely to give up traditional methods of obtaining and listening to their music.  This paper will address the psychological impact of this shift toward an ownership-free music experience, and what it means for the music industry as a whole.  It will also address the benefits and consequences of subscription-based music services, why they have become so popular, and how they will negatively impact traditional music distribution services.

Spotify:  It’s emergence and dominance in the live-stream sector

Spotify is a music subscription service that is popular among people who are socially active on social networks, like Facebook and Twitter, as well as “tech savvy.”  Its integration with Facebook is  responsible for its ongoing emergence as one of the most popular music streaming services available today.  Mashable accurately describes it as“a desktop music player and mobile app in which registered users have access to 15 million tracks.”  “It is a music subscription service that is currently available in 14 countries,” Mashable adds.  Additionally, paying subscribers can benefit from the perks of ad-free listening, unlimited playlists, and offline availability of any song that they favorite and of any playlist that they make.

Spotify allows people to play any song that they want to look up or listen to on-demand.  In addition, Spotify’s user friendly interface makes it easy for its users to share and create playlists based off of the songs its users favorite.  However, the real selling point of Spotify is the social experience people are engaged in when using the service.  Not only can users create playlists for themselves and listen to the music that they want to hear, Spotify’s integration with Facebook allows its users’ friends, family, and coworkers to see what’s trending among the people within their social circles. In this way, people are able to find music they might not have ever been exposed to otherwise.  “The interface makes music discovery easy. Users are encouraged to create their own unique experience with playlists and artist radios,” says Mashable.  Spotify seeks to make listening to music an entirely social experience, which is something much different than what other music streaming services have to offer.

In terms of Spotify’s popularity, it is reasonable to argue that people want to show off the music they listen to and are interested in finding out what it is that their friends listen to.  As we see Spotify working to make this connection between people even easier, there is no reason to doubt that the number of users of the service will continue to climb.  In addition, it’s number of paid subscribers could also increase if people become aware of how user friendly, convenient, and satisfying the service really is.

Pandora: Spotify’s biggest competitor, but still an iTunes killer

Pandora was among one of the first live-stream music services to make a good name for itself in the United States.  Any internet “radio junkie” might call this service the best thing since sliced bread.  “Pandora is an online-radio where music experts and amateurs try to classify songs to about 400 attributes. They suggest songs according to your pattern of music taste and you can say if you like it or not” (St).  The service is known for allowing its users to create radio stations based on their favorite songs, bands, or even music genres.  Adding “likes” to songs helps Pandora become more accurate in its song suggestions and radio station plays, while “dislikes” help narrow down the types of songs that it should not channel into the particular station you disliked that song on.  It is a great service for people who are actively searching for new music.

It appears that Pandora still holds the bigger market share despite Spotify’s growing popularity. .  Granted, Pandora has been around for a while longer than Spotify has.

“A year ago, Pandora might’ve appeared to have the Internet radio market locked up. Its July 2011 initial public offering, the first for a digital music company since Napster in 2005, was made possible by the company’s early dominance of Internet radio. There is a $17.4 billion U.S. radio advertising market, and Pandora had the potential to grab the biggest share of it. Clear Channel’s Internet radio play, iHeartRadio, was in its infancy. Spotify was still just an on-demand service. Internet radio had practically become synonymous with Pandora. Its straightforward approach to personalized listening set the standard for competitors to follow” (Peoples).

The consensus we could gather from Peoples’ remarks is that users prefer radio services to on-demand services.  Thus, Pandora is still a booming service.  Peoples also suggests that radio is where both the people and the money can be found, and that entrepreneurs have infused more innovation into Internet radio. Pandora, still a market leader with 74.2% of the total sessions in May by the top 20 webcasters (according to Triton Digital), and has dozens of upstarts vying to steal a sliver of its market share.  In the end, our claim that people prefer radio services to on-demand services appears valid.

We also suggested that Pandora is an iTunes killer.  If none of us recognize Spotify as an internet radio service, then none of us would classify the iTunes music store as an internet radio service either.  This is because we don’t go to the iTunes store to stream music, we go there to buy it.  Just one year after Pandora went public, it was reported that “on a national level, the Triton metrics show that Pandora is the largest radio network for listeners age 18 to 49 (Del Rey).  It appears that people are flocking to services like Pandora to get their music fix since Pandora users now seem to outnumber even traditional radio networks.  As Pandora is a free service, it is not surprising that people would want to use, or at a least try out, such a service.  Saving money while creating customized radio stations sounds much more appealing than heading to the iTunes store to purchase and download a song or two.

Possible consequences of live-streaming

While live-stream music services have their benefits, they all have their own drawbacks, too.  One of the possible consequences of adopting a live-stream music service for our music listening needs is the notion that we give up ownership rights to the music we listen to on those services.  We are not downloading those song files and keeping digital copies of them.  On Spotify, for example, we can “favorite” the songs we want to hear for easier access to them at future times.  This consequence is psychologically-related to the shift toward an ownership-free music experience, and we’ll investigate this further in the next section.

Live-stream services provide us with an entirely different social experience while we search for, find, and listen to our favorite music.  The experience we used to get when we would go down to the local village music shop to buy the latest album of our favorite artists has been changed, and therein lies the next consequence.  The days of visiting the local music shop are numbered as the generation of people who did that kind of activity grows older.  Newer generations of people participate in this online social experience instead.  A social experience has not been done away with, though; it’s just different.  Julia St of PolicyMic states that, with Spotify, “you can share music with friends, you can see in real-time what your friends are listening right now and can get inspiration. If you have friends with a great taste of music, you can subscribe to their lists or show them your own.”  Therefore, the social experience is there, but it is not on the personal level that it is when you go to the local music shop.  This is a consequence in that we become less social on a more personal level in our music search and discussion adventures.

Ownership-free music and its psychological impact

Building off of the fact that live-stream music services have psychological consequences,   Kinnally et al. report that “there are five major factors responsible for our drives to download music.  They include:  entertainment, convenience, information-seeking, storage utility, and social integration” (Kinally et al. p. 902).  For people of any generation, live-streaming music does not quite meet the storage utility factor, which could be one of the main reasons some people prefer to download music as opposed to live-stream it.  However, for those who download music “illegally,” there are chances that the music they are looking for may not be readily available through the programs they use to find their songs.  Some people do find it rewarding to search for music until they can find it, though, and this sense of accomplishment in finding songs is not likely to be achieved in live-stream services; the song is either there or it’s not.  Therefore, the information-seeking factor would not be met for those who listen to music through some sort of streaming service.

While Kinnally et al. express their reasons for the motivations that drive us to download music, Wang and McClung address other reasons why other people participate in downloading music.  Some people find satisfaction in being rebellious, and downloading music illegally is one way in which they can be just that way.  “The first ego-defensive function, related to college students’ perception that they would be regarded as ‘afraid of the risk of being caught’, shows a positive relationship with intentions to engage in illegal downloading” (Wang and McClung).  Some students adopt the mindset that “they won’t be caught,” and are willing to take that risk to get their music for free.  However, listening to music via live-stream services is not illegal in any way, shape, or form.  Therefore, live-stream services would not be ideal for anyone looking to be rebellious with the law since taking part in such a service is not illegal.

There are also students who think that illegally downloading music is socially and lawfully acceptable.  Wang and McClung claim that “college students slightly disagree that digital downloading through a P2P application is illegal or immoral.”  Here we have a case that people don’t even give downloading music a thought, despite complications with the law.  They download their music and carry on about their lives.  We can conclude that these people would not have motivation to switch to a live-stream music service because they don’t even think twice about their normal way of acquiring music files.  It would be troublesome for them to switch to a new service and learn its ins and outs while they are already familiar with a downloading program that they believe is completely legal.

Impact on the music industry and its artists

The question to consider is how the shift toward “ownership-free” music is affecting the music industry as a whole.  Bethany Klein of Media, Culture & Society discusses the following:

“The influence of the internet over the terms of music distribution has forced record companies to seek other ways to stay in business (Breen and Forde, 2004: 81), and the licensing of performance and publishing rights is a particularly ripe area. Downloading will not necessarily replace physical formats of music; the industry is becoming increasingly involved in legitimate downloading services and lawsuits to decrease the use of illegitimate services (Breen and Forde, 2004: 84–5).”

In other words, the music industry is at a crossroads because online piracy costs companies and musicians millions of dollars annually.  It appears that streaming services, which buy licensing rights to the music they stream, might be a possible solution to this problem, especially since they are services offered to users at low to no cost.  However, the effect streaming services have on some artists and bands might be construed as rather bothersome.

Ben Sisario of the New York Times indicates that “many musicians whose work does not reach the top of the charts are not as sanguine.  Complicating the issue, each type of service pays different rates.”  Ben is implying that artists are granted royalties from subscription services every time their songs are played, to which some of these services pay higher dividends for.  Furthermore, Steve Knopper claims that “Streaming services typically pay a royalty of a fraction of a penny per listen” in his “Digital Music’s Cloud Revolution” article.  If we analyze further, we would expect that live-stream music services will payout low royalty dividends to artists and bands who are not well known among the mainstream music scene.  This is because their songs are not likely to be played as often as the songs of more popular artists.

Live-stream music services: Good or bad for the music industry as we know it?

We have discussed and explained what two of the leading live-stream music services have to offer us in terms of an entirely new musical experience.  While both had their perks, each also had their own drawbacks.  From there, we were able to connect some of the consequences of live-stream music services to the psychological impacts they could have on the people who are new to this kind of music distribution.  Furthermore, we explained how these kind of music distribution services provide us with an enlightening and engaging social experience among our friends, family, and coworkers.

Additionally, we explained how live-stream music services negatively affect the music industry as a whole, and how they distribute funds to artists in their databases in the form of relatively low royalties.  While it is good that live-stream services are offered at little to no cost to users, it is not good for artists and label companies, since royalties are paid out in fractions of a cent per song play as opposed to cents to a dollar or more per song download.  However, this new way of music distribution is in its infancy, and while the number of users of these programs continues to climb, we may see changes in the market to reflect that.  People like services at low to no cost, and the music industry is changing to accommodate that desire.  What this means for the future is still unclear, but artists and record labels alike remain hurting for now.  In the end, the music industry is doing what it can to satisfy peoples’ musical desires, but as this shift toward an “ownership-free” musical environment continues to rise, the music industry will have to impose standards that satisfy both its users and those on the receiving end.

Works Cited

Del Rey, Jason. “Pandora’s New Data Not Turning Heads.” Advertising Age 83.22 (2012): 3-17. Academic Search Complete. Web. 23 Apr. 2013.

Klein, Bethany. “`The new radio’: music licensing as a response to industry woe.” Media, Culture & Society, July 2008; vol. 30: pp. 463-478

Knopper, Steve. “Digital Music’s Cloud Revolution.” Rolling Stone 1146/1147 (2011): 16. Academic Search Complete. Web. 23 Apr. 2013.

McClung, Steven R. Wang, Xiao. “Toward a detailed understanding of illegal digital downloading intentions: An extended theory of planned behavior approach.” New Media & Society, June 2011; vol. 13: pp. 663-677, first published on March 8, 2011.

Peoples, Glenn. “The Next Digital Battleground.” Billboard 124.25 (2012): 22-26. Academic Search Complete. Web. 21 Apr. 2013.

Sisario, Ben. “As Music Streaming Grows, Royalties Slow to a Trickle.” The New York Times. The New York Times, 29 Jan. 2013. Web. 22 Apr. 2013. <http://www.nytimes.com/2013/01/29/business/media/streaming-shakes-up-music-industrys-model-for-royalties.html?pagewanted=1>.

St, Julia. “PolicyMic.” PolicyMic. N.p., May 2012. Web. 22 Apr. 2013. <http://www.policymic.com/articles/9054/pandora-or-spotify-which-one-will-top-the-social-streaming-music-industry>.

“Spotify.” Mashable. N.p., n.d. Web. 23 Apr. 2013. <http://mashable.com/category/spotify/>.

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