Chapter9(the last):The Introduction of Music Streaming Services and their Benefits

Once again, I would like to try to summarize the advantages of introducing streaming services.

1)    The Dominant Countermeasure against Illegal Distribution SitesAs explained with Spotify above, the most powerful countermeasure agains illegal distribution sites is to provide a convenient and superior service. It does not mean that every user wants to get free illegal music. Related to the Japanese copyright law, the sense of obedience towards the law is rather high compared to that of various foreign countries, thus setting a legal service with reasonable price options would make many music fans chose this service.

2)    Countermeasures against Video Sharing Sites

Currently, it has become a typical behavior to search video sharing sites such as YouTube when you one is interested in an artist or song. Youtube is not an illegal service, but the advertising revenue model does not provide a big share for the rights holder of the music. With popular streaming services, it is possible to offer the user an entrance to “listening stations” and recapture this position from video sharing sites. In that case, a bandwagon effect is expected leading to various businesses such as collecting marketing data or e-commerce of related products.

3)    The Sales and Promotion Effect on Conventional Download and Package Services

As described above, instead of offsetting the sales of downloads and packages, streaming services rather increase contact chances and thus lead to promotion and sales effects as has been proven in Europe and America. Due to wider penetration with broadband services, which caused a devastating damage on package businesses, a phenomenon could be observed in Korea where growing streaming services also increased the package sales.  As radio stations were promoting record companies, streaming services are considered to have a similar effect on the number of music fans on the internet, increasing them.

In addition, the spread of streaming services will produce possibilities for new services from IT companies and various industry branches freshly entering the market. In the United States a pseudo DJ performance service called Turntable.fm[1] has been attracting attention. Moreover, with having more than 150 million users, the PANDORA[2] internet radio service that has a unique recommendation system accomplished IPO (initial public offer) at the New York Stock Exchange in June 2011. The creation of such new businesses is also expected to happen in Japan. Record companies should understand this situation as an opportunity to release a number of new businesses related to music and in order to expand their revenues.

4)    The Possibilities for Expanding Overseas Exports

The spread of cloud computing and streaming services will also expand the potential for overseas export.

Until now the worry about the negative influence of piracy could not be actively tackled. The copyright idea and the levy mechanisms in developing countries are underdeveloped, CD sales are, bootleg master circulation and such deeds, record companies work half hearted, not impossible. That the record companies were unwilling to sell CDs to countries where the concept of copyright or levy mechanisms were still at a developing stage was understandable, because selling CDs to those countries was almost an act of contributing to privacy. Regarding various Asian countries including China, if there was a cloud-based streaming service, the uneasiness existing until today would significantly decrease.

I would like to see this as an opportunity to actively expand overseas.

 

Cloud Computing as a Necessity for a Spread of Streaming Services

Because the expectations in streaming services are big, I would like to touch upon the challenges that are necessary for their distribution.

Compared with download types, streaming services require a stable infrastructure. In addition to a stable environment on the device, security and high quality distribution has to be implemented in the cloud technology.

Furthermore, for one piece of musical work various information have to tied to the song. This information becoming meta data is not only important for the handling of copyrights but also for marketing purposes.

All companies dealing especially with meta data construction, continuous sorting and the infrastructure maintenance are individually often working inefficient and wasteful. That’s why it would be necessary to create a public framework with common infrastructures. Another merit of the development of new infrastructure environments is that it could also lower the entry barriers for new businesses. Apple and Spotify which are vertically integrated companies are doing everything in-house, but wouldn’t it be a good idea “Daidodanketsu”[3] would be made into the industrial standard for Japan?

Sharing the basic fundament but competing in terms of user service would be of benefit for the user and the rights holder as well.

As described above, even though the environmental change happens in great speed it also has to be seen as a great opportunity. I want to summarize this paper with my hope that 2012 will be the turning point for structural changes in the music business and expect business to turn into a direction that promises rise.


[1] Social Media Website that allows users to share music. In so called “Rooms” users play music to other members of in a room.

[2] Also Pandora Radio, is an automated service that recommends music to its users.

[3] community based on common interests

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About yamabug

Music Producer consultant of contents business C.E.O. of BUG corporation director of Federation Music Producers Japan. in details ☞ https://yamabug.wordpress.com/2012/01/25/my-profile/ Twitter ☞ https://twitter.com/NorikazuYama
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