Streaming versus Downloads? The Fight is Far From Won

The recent decline in the music download market, coupled with an acceleration in the streaming revenue numbers, has led many to predict the kind of transition that saw the end of the cassette tape, or indeed the cart and horse. There are a few reasons, some a bit less obvious, why this might not be such a certainty.

For a start, building the higher bandwidth mobile networks required for pervasive access is expensive and difficult. Ofcom, the UK telecoms regulator, says most of the country has 50% or less 3G coverage. There are plenty of ‘not spots’ due to topography and building materials, so there are likely to be connectivity constraints and disappointments for the foreseeable future. On one of Britain’s main train lines there’s only a 10% chance of maintaining a 15 minute mobile phone conversation. Even if we wanted mobile music on demand we’re not likely to get it cheaply and reliably for years.

The second aspect to look at is the nature of demand for music. Studies show that most people are happy with a library of 1000 tracks or fewer, a minute fraction of the 50 million tracks now available on demand. And by far the majority of music buyers, even in music mad countries such as the UK, traditionally listened to the radio and bought one or two albums per year.

In a recent study consumers cited the ability to play music offline as the biggest benefit of a paid for music subscription. They get that with downloads, and with CDs, which perhaps explains the resilience of compact discs, along with the resale opportunity of course. What’s more, mobile data storage is going to get bigger and cheaper much faster than any improvements in mobile broadband. A small personal library, with a radio, and the occasionally impulse track download, is perhaps the ideal package for the casual music buyer.

It’s likely that streaming’s rapid growth represents the migration of heavy download buyers to a more attractive value proposition, rather than the rest of the market trading up. There might be other reasons for the casual buyers to be enticed into streaming services, for instance their value as profiled targets of advertising. But as things stand downloads serve all but the top few music buyers with a much better mix of price and functionality, so they are likely to be around for a long time yet.

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