Chapter8:The Potential of Streaming Services and the Need for Cloud Infrastructure Maintenance

The Sweden based streaming service Spotify has been the focus of great attention. In addition to 12 countries in Europe, Spotify started a full-scale service in the United States in September 2011. It appears as if the number of members has steadily increased up to more than 4 million paying subscribers in August 2012. 

One of Spotify’s greatest features is its perfect legality. Based on a Peer-to-Peer[1] management technique, the service has also received funding from major record companies. Following the policy of “providing a high level distribution service that is more convenient than illegal sites” and because of the so called “Freemium”[2], free of charge advertisement service, and a 2-step charging system the number of users is increasing.

File sharing software which certainly can be called the arch-enemy of the music industry, lead to the development of this technology and is of great interest.

Another feature is its affinity to other social media. It is collaborating with the worlds biggest social media platform Facebook. From the beginning of the service, the relationship has been very close, which was also uttered by the Facebook Management with phrases such as “Facebook–Music is already there. It’s called Spotify”. The system of getting to know music recommended by a friend seems to be exceptional.

In England, France and the United States streaming services are not understood as merging and each other offsetting download and package businesses, but rather has data shown that there is a synergy effect, and thus global record companies show a positive attitude and engagement towards music streaming services.

The environmental changes including the development of internet technology, the possibility of always being connected to communication environments, and the wide spread of smartphones have an influence on an entire lifestyle and are thus expected to change the way of listening to music as well. It is forecasted that the fundamental change of recent years which can be called “From Ownership to Usership” will most likely also lead to a change in ways of listening to music away from downloading forward to streaming.

Nevertheless, since Apple, which owns a great share of the western market, has started its iCloud[3] personal cloud computing service, it seems as if the transition from download to streaming will be postponed.

In Japan, one of the iCloud functions, namely iTunes Match[4], can not be used, because negotiations with record companies have been on hold. It seems there have been critical comments from some users, but nevertheless there is a compelling number of CD rental stores which is an unavoidable feature of Japan. In the first place, Apple did not assume the presence of rental shops when designing its service, because rental businesses like the Japanese do not exist anywhere else outside Japan. The ripping from rental CDs as well as downloads from illegal sites would be converted into high-quality sounds once iTunes Match could be used. It can be called “file laundering”, comparable to money laundering. The iTunes Store which owns a majority in the global market share has less than 10% share in Japan. Outside of Japan record companies have a contract which makes them pay royalties to iTunes , but taking the characteristics of the Japanese market into account it is believed to be difficult to introduce such a system in Japan.

Here, I would like to touch upon an amendment to the Copyright law which was passed in June 2012. In relation with the music industry the so called “Illegal Download Regulation” is now in focus.

Users who knowingly download from illegal sites and did not have to fear any penalties until then, are now subjects to penal action. It is an offense subject to prosecution only on complaint[5]. A simple “punishing a crime to make an example for others” is not going to happen. Thus, more important is that the record industry has a social responsibility providing a legal, convenient and inexpensive service on the internet. Until the law is being enforced in October 2012, a legal and convenient music-listening environment for net-users should be provided.

〜from “WHITE PAPER of DIGITAL CONTENTS in JAPAN” (supervised by METI) (translation:Benjamin Tag) 


[1] Computer network, where each participating computer can act as client or server for the other computers.

[2] Mostly online business model where basic or goods are provided for free. Advanced features, functions and services require a fee.

[3] Cloud computing and cloud storage service from Apple Inc.

[4] Part of iCloud that requires an annual subscription fee. It offers non-protected music files. It enables the user to store songs that are available on iTunes in the iCloud. Unavailable songs will be added to iTunes by Apple.

[5] Type of crime which requires a formal complaint from the victim in order to prosecute. In English often “Antragsdelikt” (from German). 


About yamabug

Music Producer consultant of contents business C.E.O. of BUG corporation director of Federation Music Producers Japan. in details ☞ Twitter ☞
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