Media: All about - Digital music business

Can cloud computing boost the ailing music industry?

The digital generation has always had a paradoxical attitude towards music. Never before have so many known so much about music; and never before have so many described themselves as unconditionally "passionate" about it. And yet members of the digerati, though their disposable incomes are, in historical terms, vast, spend less on supporting a music habit than their parents or grandparents did.

Stealing, in short, has become so ingrained that no-one remotely recognises it as theft any longer. Everyone who works in a digital advertising agency, for instance, will know at least one person who "owns" a truly vast archive of material stretching to many thousands of albums, including the very latest releases. No names, no pack-drill - but they're likely to have spent impressive sums on the kit (inherently lo-fi kit at that) and next to nothing on the content.

And it's thanks to militant niggardliness of this sort that the music industry, creatively, has been on its knees for considerably more than a decade now. But no matter - every age gets the culture it deserves.

Music industry luminaries have hardly thrown in the towel just yet - recognising, as they do, that someone has to punt The X Factor pap and the latest Foo Fighters album. It might as well be them.

And interestingly (indeed, again, perhaps paradoxically), it's to those aforementioned digital advertising people that the music industry turns, fitfully, every now and then, for salvation. Because, of course, the theory is that, in a world in which content has a diminished intrinsic monetary value, it should be possible to derive new forms of revenue from the listening (or, indeed, viewing) event itself.

We're talking, in short, of ad revenue. In the past, this notion has proved problematical. There's a new factor in play now, though. It's called cloud computing.

In the past, all your software and digital media content resided on your own hard drive; in the future, it will all be held on a remote server and you'll be allowed to access it, courtesy of the cloud proprietor, as and when needed, via the internet.

It's a bit like acquiring a new bike and letting the bike-shop owner look after it - the advantage being that other people may be able to ride it for the 360 days of the year that you don't. What's more, cloud computing has huge implications for the consumption of content - for instance, when you listen to "your" music, the cloud owner is aware of what you're doing and can enhance your experience with content of his own.

That's why there seems to be a revival of optimism and activity these days in the digital music business. After all, as David Essex once posited, every cloud almost certainly comes equipped with a silver lining.

1Much recent speculation has surrounded Spotify, the online and mobile music streaming service that has been hugely successful in attracting users but less successful when it comes to generating a profit. It has always had a mixed revenue model. You can access it for free if you are prepared to have the service interrupted now and then by ads. Or you can subscribe to an ad-free version. In mid-April, Spotify announced it was capping listening hours on the free service. Many believed it had been asked to do this by the big record companies as a condition of their granting the rights needed for Spotify to launch in the US.

2But within days, this speculation had been modified as rumours emerged that Google was preparing a bid for Spotify and intended to make it a vehicle for the launch of a cloud-style music portal. Some sources have estimated the value of the Spotify brand at more than $1 billion.

3It is also believed that Apple is on the verge of launching a cloud-based iTunes variant.

4In contrast, the music industry's own schemes to generate ad revenue can seem slightly uninspired. Last week, the UK version of Vevo, a music video site backed by Universal, Sony and the Abu Dhabi Media Company, went live. Its US version launched in 2009 and soon became the country's most popular music-related site. Its sponsorship and advertising partners have included McDonald's, Unilever and American Express.

5Music streaming in the UK received a separate boost with the launch of Radioplayer at the end of March. A joint venture between the BBC and the major commercial radio companies, it offers live streaming and on-demand content from UK radio stations.

WHAT IT MEANS FOR ...

Consumers

- There's anecdotal evidence that consumers are almost as resistant to the notion of advertising as a way of funding the digital music industry as they are to more direct forms of payment. Efforts to blur the difference between archive streaming and traditional linear radio will continue to be interesting - as, of course, will the whole notion of cloud computing.

- It's telling, though, that leading-edge technology websites are already overflowing with righteous indignation at likely privacy infringements that are, they argue, inherent in the very idea of cloud computing.

Advertisers

- Advertisers and their agencies routinely buy good tunes to adorn their commercials - but music isn't everyone's cup of tea as an advertising environment.

- Not for nothing does Vevo make so much of the fact that it offers sanitised versions of music videos. When Vevo UK was "pre-launched" back in January, it wheeled out a band to front the whole bash. Its choice was instructive: it was none other than that collective benchmark of creativity and growth potential in the music business, Duran Duran.

The music industry

- Last week, one website dedicated to technology not only described Spotify as a runaway success but also ventured the notion that it has "saved" the whole music industry. Or if it hasn't quite done it yet, it will do soon.

- Just how much saving, we wonder, can the music industry take? So far, if Spotify has proved anything, it's that advertising has yet to prove itself a future revenue stream for the online music industry.

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