Will Streaming Services Kill Cable and Music Downloading?

Entertainment / Slider / October 31, 2014

HBO recently announced that it would offer a streaming service that would allow subscribers access to its programming without needing to pay for a full cable subscription, giving consumers another reason and perhaps enough motivation to eventually cut the cord from cable and the associated monthly bills that can reach into hundreds of dollars per month. At the same time but with slightly less media commentary, consumers are well into the process of cutting the cord from music downloading services as well.
Much like the migration to streaming video services, consumers are increasingly opting for streaming music over downloading for two primary reasons; cost and variety. In the iTunes universe, the average price per song is just under $1, and a little bit less when you’re buying an album. Of course buying an album through iTunes or anywhere else comes with the same primary disadvantage as it always has; the buyer may truly enjoy only a handful of songs while the rest are either endured or skipped altogether. For recent evidence of dissatisfaction with an album, look no further than U2’s “Songs of Innocence” that was downloaded on the new iPhone 6 as a gift to purchasers.
At $1 per song, building a library of music can become expensive quickly, especially when compared to the relatively low cost of steaming music which, in many cases, can be free-of-charge. Consumers apparently are taking notice of these costs and are flocking to streaming sites such as Spotify, Pandora, Grooveshark, and others to the point where sales for music downloadsat the iTunes store are off by about 13 percent this year, according to the Wall Street Journal. At the same time, Spotify’s number of users has grown by over 60 percent while Pandora added approximately 10 million users over the same period.
Even with lower sales, Apple’s iTunes Store is immensely profitable while the businesses within the streaming audio category are either narrowly profitable or still operating in the red. However, Apple is no stranger to disruptive innovation, having disrupted a few business models themselves. In streaming, the company has seen the writing on the wall and is in the process of relaunching and building out its own streaming service, “Beats Music”, which will likely be renamed to fit within the Apple universe. iBeats anyone?




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