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Opening Pandora's box: the rise of streaming music [The Oklahoman, Oklahoma City]
[December 10, 2012]

Opening Pandora's box: the rise of streaming music [The Oklahoman, Oklahoma City]

(Daily Oklahoman (Oklahoma City) Via Acquire Media NewsEdge) Dec. 10--The song remains the same, but the way people hear that song is changing by the minute.

On Dec. 5, Bloomberg reported global sales of tablets -- iPads and Android, Windows and Google-based flat, touch-sensitive screens -- are expected to hit 117.1 million units in 2012. By 2016, tablet sales are projected to hit 282.7 million, outstripping the market for hard drive-based laptops. And the desktop computer, that bulky, stationary machine where millions of people have stored their digital music since the mp3/iPod revolution of the late-1990s and early 2000s, will be going the way of the typewriter.

This shift in the technological marketplace is pushing the popularity of online music streaming, a phenomenon that began in 2000 with Pandora and accelerated in recent years with the advent of smartphones and high-speed mobile networks. In July 2011, Pandora had more than 100 million registered users worldwide. That same month, the Swedish streaming music service Spotify debuted in the U.S., providing its customers with access to more than 20 million songs.

And the streaming music ranks keep growing as other domestically available services, such as Mog, Rhapsody and Rdio, continue to add subscribers and overseas companies such as French-operated Deezer wait in the wings. Most offer limited free access with commercial breaks, while premium, commercial-free mobile services hover around $9.99 per month, and are accessible via mobile apps. Last week, Rdio made its 18 million-song catalog available to several new European markets, bringing its service to a total of 17 countries.

In a Dec. 6 interview with Charlie Rose and Gayle King on "CBS This Morning," Spotify co-founder Daniel Ek said by making huge amounts of music available easily and legally, services such as Spotify are effective in combating the music piracy that escalated in the late-1990s with Napster and peer-to-peer file sharing.

"The music industry -- because music is the most social object -- it was probably one of the ones that was hit hardest of all media types when it comes to piracy," Ek told Rose and King. "So, you know ... the music industry back in the year 2000 was actually about a $45 billion industry, and now it's about $15 billion. It's one-third of where it used to be, but at the same time, people are consuming more music now than ever before. So it's pretty clear that there's something wrong here. And what's wrong is that people are listening to music illegally. What we're doing is taking them from ... an illegal service into Spotify." But not everything is streaming smoothly in the digital music world. These services, which pay licenses to record labels, artists and performing rights organizations such as the American Society of Composers, Authors and Publishers (ASCAP), are coming under fire from musicians for their royalty rates, which do not compensate musicians as well as the rates for album sales. In an Aug. 31 Twitter post, the Brooklyn, N.Y.-based band Grizzly Bear said, "Spotify might be good for exposure, but after 10k plays we get approximately 10 dollars." Scott Booker, manager of The Flaming Lips and president of the Academy of Contemporary Music at the University of Central Oklahoma, said it is often hard to tell just how much the Lips are earning from such services, but he knows that, as of now, it is small potatoes.

"Royalties come in so many different forms, and what happens with Rhapsody, Spotify and those types of things is: it goes to the label, and then the label gives us our piece of it," Booker said. "But a lot of times, it's buried in our statements that don't show up for six months after the payment period." Booker said he is not concentrating much on the issue, for now, mainly because most of the band's income is derived from concert ticket sales, merchandising and licensing rather than recorded music, whether it comes from physical compact disc sales, iTunes downloads or streaming audio services.

"There's a side of me, too, that doesn't want to look into it and just get depressed," he said, laughing.

The backlash among artists against such services reached critical mass in November, when Pandora sued ASCAP to force a reduction in royalty rates it pays to songwriters and publishers. On Nov. 15, artists including Rihanna, Katy Perry, Sheryl Crow, Cee Lo Green and Pink Floyd's David Gilmour signed a public letter criticizing Pandora's actions.

But Oklahoma singer-songwriter Beau Jennings said Grizzly Bear's much-circulated tweet and the Pandora protest letter miss the point. He said musicians should not expect to get rich from their recordings in the current industry environment, but that hard work and good songs are rewarded eventually.

"If the world does need it, they'll pay for it," he said.

In February 2013, Jennings and his band, The Tigers, will release a new mini-album titled "Sweet Action." He said he plans to release it in all formats: compact disc, iTunes and streaming audio. He said the exposure he can get from Spotify and other services can create incentives to buy discs or downloads.

"Yeah, I'm just going to put it out on everything," Jennings said. "I used to try to think about trying to be more selective about that stuff. I listen to a lot on Spotify. It's hard to gauge what the general public's going to do, but if I listen to a record a lot on Spotify, I end up buying it." Travis Searle, co-owner of Norman-based Guestroom Records, said he has no personal use for such services, since he has access to 17,000 albums in Guestroom's three metro locations and constantly receives new music. He does not even own an iPod, preferring to listen to the high-quality vinyl records that now dominate Guestroom's inventory. But he sees the value of these services for exposing potential Guestroom customers to new music.

"Before Pandora and Spotify, when it was Napster or any sort of BitTorrent or whatever, I was like, 'I don't care if you download music,'" said Searle, who said he has seen CD sales plummet at his stores while vinyl continues to enjoy its resurgence among dedicated audiophiles. "That's how you find out about stuff. That's how you learn if you really want to listen to that first Crystal Castles album that no one's ever heard of. In that way, I think the online services are pretty amazing.

"You know, go listen to 50 different albums on Spotify, then go out and buy four of them," Searle said. "Go out and actually buy the ones that you feel need to be a part of your life." Growing pains for this emerging market were probably inevitable, and might not be over yet.

In October, Bloomberg reported that Apple may be joining the streaming music market with a service that could directly compete with Pandora. On the news, Pandora's stock price dropped 14 percent. However, reported last week that Apple's negotiations with major labels over royalty rates have stalled, and there is no set launch date for such a service.

But as technology advances, tablets become even more pervasive and music listeners become equipped for streaming music, the whole paradigm could shift again. Booker said many things must fall into place for the ideal service to flourish, including technological advances and deals to bring holdout artists such as Led Zeppelin and The Beatles into the streaming universe.

"If you look at Apple or any of these companies that deal in the digital realm, they have a lot longer-term plan set in place than any of us can fathom to some degree. I really do believe that the iPhone came about so that it could be a digital server in a sense," Booker said. "When digital music, digital movies and digital television are going to matter in a big way is when you can be anywhere at any time and get the bandwidth you need to stream anything you want to stream." This "everything, all the time" ideal might seem hard to reach given the awkward adolescence the services are currently experiencing -- a problem that is being paralleled in the rise of streaming video services such as Netflix and Amazon. But touch-screen tablets were the stuff of "Minority Report"-style science fiction movies a decade ago. As Booker said, it might not take that long.

"All the roads are leading toward those things happening. But until that happens ... until everything is available on one service in all places at all times, it's kind of a moot point," said Booker, who stores all his music on a high-density hard drive while he waits for technology to advance. "But I think we're really, really close to that happening." ___ (c)2012 The Oklahoman Visit The Oklahoman at Distributed by MCT Information Services

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