Something Important Is On The Horizon In The Music Business

Having ceded the file based music opportunity (mp3s and drm’d file formats) to Apple, the recorded labels are now getting hip to the much bigger opportunity, streaming music.

Yes, it’s true that listeners will still want to own files for a few more years. There are places and devices that can’t get high bandwidth wireless Internet access, like my macbook pro which I am writing this on the plane ride home to NYC. I am listening to mp3s (no drm for me) in iTunes all the way home.

But over the next five years, the number of places and devices where you can’t get a speedy wireless connection is going to dwindle to maybe the car. And you’ve always got radio in the car which is going to get better and better because it has to in order to survive.

Like everything that has happened in digital music, the rights holders have been once again been forced into dealing with an emerging technology. Companies like and imeem and others have, over the past year, have done deals with the leading rights holders to give them permission to stream pretty much any song they want to listeners over the Internet. They can do this “on-demand”, meaning you want to listen to the new Jack Johnson song, you tell your favorite web music service that and it plays. They can also stream music in various forms of smart playlists, either the tracks you have marked as your favorites, or the tracks your friends have suggested to you, or the tracks that people who like the same music as you like. Each and every service has a different take on these playlists. I happen to like and hypemachine. You may like Pandora. Someone else might like Jango. Your kid’s myspace page might have an imeem playlist on it.

And because of all this innovation in streaming music over the past year, the number of people actively listening to music streamed over the Internet is rising quickly. It’s becoming a mainstream activity, particularly among the younger set.

I think of these web services as the new radio stations. Everyone of my generation has had their favorite radio stations. Everyone of my kid’s generation will have their favorite web music services. There will be hundreds of them. All supported by advertising, just like traditional radio stations, and all of them licensed by rights holders (eventually), and all of them paying the rights holders a little coin every time their song is played. And because these services will be free to anyone who wants to listen, they will be very popular. Never before have you been able to decide you want to listen to something you don’t currently own and then just play it. No searching on Limewire or bittorrent, no waiting for the download, you type in the name of the song you want to play and you hit play.

These services are coming to mobile phones, probably in the next year we’ll all be listening to pandora or in the gym on our phone instead of our limited library on our iPod. That’s when this new form of listening is going to explode. And that’s when Apple is going to wish it had thought more about streaming and less about file based music. But you can’t feel too badly about Apple because a good number of people will be listening to pandora or on their iPhones.

Two things happened this past week that may be important to this emerging market. First, MySpace got in the game. They cut deals with most of the major labels to allow them to offer their own streaming service. It’s MySpace, and as Bob Lefsetz points out, they have their own set of challenges with technology and user experience. But music is a HUGE part of the MySpace experience and they have over 100 million people a month coming to MySpace, often for music, and that’s a much bigger audience than anyone else has for a streaming service. And they’ve been in the business of streaming for a long time, not in a particularly easy to use way, but they play a lot of music to a lot of people every day. So I think MySpace will be a meaningful player in the emerging streaming music business.

The other thing that happened is Ian Rogers left Yahoo Music where he had been leading the charge for the past couple years and joined a small startup in LA that has some ideas about this emerging market. Ian is a super smart guy, one of the few people I’ve met in the web music business who really gets where this is all going.

What Ian knows is that the fans are the most powerful distribution points for music. He gets the power of mp3 blogging. He understands that the Hype Machine has built a terrific new age radio station by aggregating all the music that is being posted onto mp3 blogs and he understands that further enabling that kind of behavior, where the fans are the ultimate arbiters of what gets played and what gets popular, is the end game for all of this.

I don’t know much about what the company Ian joined does. And I haven’t been told about any of their plans. So this is all just conjecture on my part. But watch what they are going to do closely. I think something important may come of out that development.

Here’s what we need. We need someone to create an easy to search streamable library of all the recorded music in the world. We need to be able to grab a track and embed it on our blog. We need to be able to see how many people played it. We need others to be able to crawl these user pages with the embedded music and create algorithms based on who posted it, how often it was played, and how often it was reblogged and linked to. The services that do all of that need to be able to play the music that flows out of these social algorithms in the same way. This all has to be licensed and legal and it has to result in money flowing to the artists. If you put the music on your blog, you should have two choices. Allow the ads to be served into your music or your page or both by the service you got the music from. Or deal with the monetization yourself and pay the royalties you owe. Most people will do the former but some will do that latter.

When this platform is built and served up, a million flowers will bloom. Everyone who wants to be a radio station will be one. And it will be simple to do it. And it will be legal. And we’ll be able to listen in our homes on our home stereos, at the gym, at work, at the library, and some day in the car.

That’s the future of the music business. And we’ve made a lot of progress in the past year getting there. I am excited as a fan, a listener, a technogeek, and an investor.

Note: Sorry for the absence of links in this post. I wrote it on the plane home last night and didn’t have time this morning to fix it up.

#My Music#VC & Technology

Comments (Archived):

  1. everysandwich

    Supported by advertising, just like regular radio stations? That’s intriguing. In theory a streaming station would know all my specifics from the net and deliver ads laser targeted to my sandwich preference. That doesn’t necessarily strike me as a good thing.

  2. AlexHammer

    Fred, you are a cutting edge VC. Very astute!

    1. fredwilson

      Or maybe I am just a music obsessed technogeek

  3. mscohen91

    I agree that free streaming will be big but who will pay for it? I believe the answer is advertisers. I also believe that the advertising must be audio ads inserted between tracks. So you are right, it will be very much like radio. The key difference is that listeners will program their own stations.Check out the Ad-Supported Music Central blog:http://ad-supported-music.b

    1. fredwilson

      That is the central point of my argument. I guess I didn’t make it very wellFred

  4. Mo

    Fred, I just left a comment on Bijan’s lotd and said that I couldn’t listen to the song he posted because, I was on the iPhone.Flash can’t come soon enough to mobile devices. That is going to be a huge boost for streaming music. Oh and 3G Blackberry, iPhone and other mobile devices will just take all this to the new level.

    1. fredwilson

      Apple’s decision not to include flash in the iphone is a great disappointment to me and is futher indication that they still have their head in file based music and don’t see the power of streaming, particularly on mobile devicesFred

      1. Chris

        Apple’s decision has more to do with the fact that Flash on mobile devices sucks CPU and battery life like nothing else.

  5. William I

    Very Astute commentary. I know that the expansion of wireless services in mass transportation will greatly benefit the ability of streaming music (for example, DC Metro has recently announced that it will integrate wireless through out its subway system.) However, I would like to add a point. Just as in the previous generation, you would listen to a song on your favorite radio station, then still go out and buy the album. If for any reason other than the fact you now own something tangible. For many poor college students, streaming music is an ethical (i.e. non illegal) way supporting our favorite artists. Though, we would still want to ‘own’ something tangible. I agree that streaming will provide the randomness of radio stations, but what is the take away for the consumer? Do you think they will both buy a song on itunes and still listen to streamed music?I also wanted to thank you for interesting commentary. They allow for the discussion of nuance tech issues that I did not know occurred. The blog has also made me interested in venture capital, not as business but rather the large social implication these technologies have. Keep up the good work.

    1. fredwilson

      I think we will eventually move away from the need to ‘own’ music but it will take time. Until I can be sure I can always hear exile on main street whenever I want to, I will want to own it and I do in vinyl, cd, and mp3Fred

  6. Mitch

    Commercials stink. Only half of radio’s problems are the programming, the other half is that there are (too many) commercials.iPods (MP3 players) are great because I can listen to what I want, when I want without listening to commercials. Having to buy a song once, is a small price to pay to being to listen to it dozens, hundreds or thousands of times without ever having to listen to a commercial.I believe there is a very, very large pool of people that value their time/sanity over a few cents/dollars when it comes to getting their media. Think about the number of people who use DVRs and skip all the TV ads and listen to their iPod. It’s a lot of people that won’t sell their soul for a few cents.Ads stink! I’ll stick to the purchase model.

    1. fredwilson

      MitchYou think commercials stink. But obviously there are millions of people whogladly put up with them on TV, radio, magazines, etc.I think if they allow artists to get paid for their music that is freelybeing listened to on demand instead of being pirated onto iPods, that’s agood thingFred

  7. KeithCowing

    This post absolutely stopped me in my tracks. I’m very interested in web technologies and music, and have heard all these ideas in bits and pieces from various sources. But I have never read one concise statement like this that truly sums up the future of music in a way that makes EVERYONE happy: artists, the users, and the content providers (perhaps MySpace will be the next form of record label?). You clearly see the big picture and can look around the corner before anyone else. You inspire me as a lover of music and the web, and as an aspiring entrepreneur. Thanks.

    1. fredwilson

      Stopping people in their tracks is a cool feeling.I am happy you liked it and I hope that it, in fact, ³sums up the future ofmusic²fred

  8. J Herskowitz

    Funny… while you were writing this, I was writing this….http://globallistic.blogspo…I didn’t follow my thoughts through to conclusions on my post, although I agree with you as to that someone (or multiple companies) should step in as a music middleware provider and provide all the hosting/streaming/API for the tracks. That middleware provider would handle all the royalty collection and deal with the labels. Thousands of 3rd party sites will leverage the API (either giving way the in-stream to the middleware provider and keeping their in-page revenue, or paying a fee to get it ad-free). But that is only half the problem… the other side is how are the copyright holders compensated (how is the pool of money divvied up)? Per play? Per download? A combination of both? The difference between and a stream is becoming indistinguishable and with no consenus in sight it becomes worrisome that it could sink any/all plans.

    1. fredwilson

      Great post and great summary of all the action.As I said in the title of my post, I feel that something important is on thehorizonfred

    2. Robert Preskill

      It’s interesting that we no longer place the kind of value on the physical thing you hold, but instead look at the immediacy and omni-access (It’s Sunday morning, and so I will make up words if I want to). Having said that, I agree with Fred, and see this happening with other media to come. I have less optimism, since the increase in payments to subscription and technology services, will create new challenges for the media industries. The checks and balances of the big business media markets hinge on the fact that they are a leaky boat, easy to bypass and expensive to protect/enforce. So, my main concern is that people on the whole will gravitate toward a watered down free media experience than a richer purchased-media experience. Commercial based aggregate media combined with live event revenue may be the only way to make a big business out of music comprimise there is if it means you can have a richer experience. A precise every-part-of-the-cow ad rev system would mean that an unsigned band with an audience does not need to compete against huge acts to earn some income and book some dates. Having said that, I wonder–what will be the role of ASCAP and BMI, Harry Fox Agency, or is there room for one consolidator of that data to work with the major advertising agencies to take a campaigns down the licensed ad chain. I probably should know the answer but nothing comes to mind.Rob- A Media Lawyer in SV

  9. Alex R

    Great post, Fred.If I could add a little bit to your “vision of music’s future”, I would love to have the ability to push songs to people who would like them. This will be particularly important for the longtail of smaller indie artists, where word-of-mouth is most important.For example, when I hear a new song, I would love to send it to a few of my friends, or better yet… add it to their current playlist!

    1. fredwilson

      that is central to the whole social music service that i am imagining. it’s called “superdistribution”fred

  10. ppearlman

    “We need someone to create an easy to search streamable library of all the recorded music in the world.”amen!

  11. Bob Warfield

    Fred, you are so wrong! LOLMuch more on my blog:http://smoothspan.wordpress…but suffice it to say that streaming totally cedes control and I don’t want to do that with my music. It’s great for discovering new music, but I want control of the bits. I don’t want to buy them over and over: certainly not per play and definitely not by using my attention as currency for your ad model. I don’t want either a streaming startup or big music company in control of my music. Neither has a good track record for it.I don’t want these things for the same reason people should have access to their social graph data or the SaaS data.Cheers,BW

    1. Druce

      The distinction between streaming and ‘file-based’ seems a false one. They’re the same bits sent through the same pipes.Streaming clients don’t do a good job of implementing a ‘track’ concept, ie letting you save the track you just heard.Downloads don’t do a good job of starting play immediately.But they’re the same bits. Make better clients and the two merge into one. The notion that one gives more ‘control’ just means one client does the thing you want.

      1. fredwilson

        I don’t agree druce. There is a fundamental difference between ‘rent’ and ‘own’And you can save streamed tracks at hypem.comGod bless the hypemachine!!!Fred

        1. Druce

          That absolutely rocks… just downloaded the Soulwax remix of “You can’t always get what you want” from the movie ’21’, which I would never have downloaded (and paid for) otherwise.That being said… I can’t help wondering how hard it would be to write a client that would save the mp3 off the site without paying the 99 cents. Rent vs. own seems a legal distinction as opposed to a technology distinction.I hope great services like Hype Machine get the industry support they deserve to keep doing what they’re doing. If they do, and the law and security infrastructure catch up to create a legal distinction, I would happily cede the point.

          1. fredwilson

            What is your name on hypem?I want to follow you

  12. DavidAdewumi

    Fred,The problem is, while everybody has their own solution for the music business as a whole, I don’t see many offering solutions for the artists.The focus, essentially, is on saving the economy and the big banks, which is in the case the music business and the record labels.Meanwhile the cries and pleas of the home owners go unheard.What NIN does, Jay-Z & Madonna with LiveNation, and MySpace with 3/4 big labels (perhaps EMI is waiting until D. Merrill gets settled in) is like big entrepreneurs getting VC money — for the majority of entrepreneurs, in this case musicians, who don’;t have a big name, there still is not a viable model for them.This is my suggestion (posted in a string of twitter messages):what is needed for the music industry is not American Idol, but rather Y Combinator-model seed funding & mentoring for budding artistsmoney to live for 3-6 months, and tutoring from some of the top bands, artists, producers, agents in the country, who will “demo” beforenot just TV audiences, but the “investors” and “press” who will go on to sponsor these budding musicians and help them grow their productfellow VentureBeat writer Anthony Ha rightly suggested: “interesting idea, though i’m also a fan of the “don’t quit your day job” model of artistic growth”in which I replied: “@anthonyha the same could be said for entrepeneurs — sure some must toil away by “moonlight” but isn’t what why people move to SF?for a chance to stop moonlighting and hone their craft & product day AND night? @anthonyha I don’t have the answers, sure, just thoughts “thoughts?

    1. Ethan Bauley

      I just wrote an article on the Tunecore blog called “Musical Freedom = Musical Responsibility”:…I am making the same points you are, basically.I like your model; it is something I was working on a couple of years ago. It is much more capital intensive than web services so I have opted to develop the latter.I think you will dig my article. Please drop me a line 😉

  13. Geoff

    Totally agree about streaming – I’m totally addicted to – I even pay the monthly subscription for the premium service, my only contribution to the music industry in the past few years!

  14. Jeffrey McManus

    Fred, not sure I’m with you on the inevitability of radio getting better, or on the notion that people won’t want to own MP3s. I think that radio in particular is finished. In 2003 when I last had to do a big freeway commute I bought a $200 car stereo that played MP3s; if I had to do a commute like that today I’d listen to the iPod in the car. There’s just no place for terrestrial radio when confronted with the amount of choice that people have now.

    1. fredwilson

      i hear people say that all the time Jeffrey, but radio provides someone to play to music for me, to play music i don’t know about, and to play music that i haven’t heard in years.i’d guess that i still listen to radio about 1/3 of the time i listen to music even though i have dozens of other options that are supposedly betterfred

  15. Martin Edic

    There’s only one thing wrong with this scenario (and I think you are 100% right)- the record companies. They are going to fight this tooth and nail because new distribution models kill their only business advantage. Of course it’s dead already but they can’t admit it.I think the rumored model where you pay a surcharge when you buy your iPod that gets you all the music you want for the life of the player is a logical transition model. It generates revenue to pay the artists and labels. Once the majority of new artists stop using labels we won’t need downloads.I like the Y-combinator for artists idea- has potential.

  16. Jordan

    Fred:This is great commentary and as a music lover and streaming addict, I couldn’t agree more. I love your view of the music future and how technology and music intersect/interact, but I remain curious about one thing: given your love of music and sophisticated perspective on the industry, why does Union Square Ventures have no music-related investments?

    1. fredwilson

      mainly because the rights issues that need to be solved have not been solved. there is no open platform to innovate on yet. until that happens, i can’t in good faith commit my investor’s capital to this market.fred

  17. Gunnar Östergren

    Not a bad idea Fred. I’ve actually worked on it for almost 3 years and have a decent infrastructure and applications to do it but the problem is, none of the VCs I’ve met so far (including many big names) fully get this or dare to go there. With DRM mostly off the table things are looking brighter but the major labels are still not playing unless you pay them up front, hand over a generous amount of equity, pay per stream fees and accept all kinds of insane usage restrictions. I could go on and on about this but I’ll spare you the details. Technically it can be done for a few million dollars but it takes very deep pockets to “prime” the system with the content the users want. You can get all the independent content you want but that doesn’t work particularly well neither for subscription nor ad-supported models. If you already have the audience and enough cash, this is definitely doable, but for a small startup it’s just too big. Especially if you are not willing to break the law to get the audience.

  18. Ddonat

    Hi Fred,You mentioned: “We need someone to create an easy to search streamable library of all the recorded music in the world. “I agree, but to get that to happen we need a Universal Music ID service and a global repository for music metadata. It simply does not exist today, and the closest thing we have is All Music Group which not only costly, is not a web service and is hopelessly archaic in its depth of data and timeliness when compared to Wikipedia.http://www.davidrdgratton.c…It’s a boring topic, but it is a critical service for this industry.

    1. Gunnar Östergren

      Ddonat, you are definitely right about the quality of current meta data services (and I have looked most of them indetail). However, the fact that most labels or content aggregators push their tracks to digital outlets provides some relief since their “feeds” tends to be (or at least gravitate towards) quite similar (iTunes) and not too hard to handle. There are not that many providers making up the majority of (and most popular) tracks either. A set ID and all other things we wish for would obviously be great but you’d still have plenty of issues with name collisions (given the size of the long tail) and classification (subjective for sure and iTunes has too few). Tagging, rating, recommendations, various tools, etc helps in terms of exploration/navigation but I expect this to be more or less messy. A service that gives the originator (being an artist/label/aggregator or whatever) the opportunity to control their meta data would be great. But depending on the product/service, some repackaging is likely needed anyhow to provide a decent user experience.

  19. az

    the masses (illegal p2p file-sharers) are not yet ready for streaming. not to say, there isn’t a market for it, but i strongly believe that at least for the next few years, the industry must find a way to legitimize p2p downloads & monetise it. i don’t think free legal streaming is enough to lure anyone away from limewire. people are still accustomed to downloads, they like to ‘own’ music, they want it portable, & streaming just isn’t doing that now in a major scale & won’t be for a while

  20. ian c rogers

    Thanks for the kind words, Fred.

  21. Yanos Solong

    I like what Seeqpod is doing with searches of available streaming mp3s. Have you seen the iRadio app that was written for the iPhone–it appears to be down but it’s I agree with you that there is an issue with the licensing. Additionally it seems like all licensed music will be stolen–inevitably–so do you think there will always be holdouts refusing to stream their holdings?

  22. Joe Lazarus

    There’s something odd about the idea that I would have to pay to post music to my blog and promote it to friends. I mostly agree with your vision, but I would add that there should be a third option in addition to paying royalties or inserting ads: free trial. I should be able to post a song to my blog free of charge without any ads. The system behind the embed tool that I use to post the song should track how many times you, as a visitor to my site, listened to the track across all websites & devices. If it’s new to you, you should be able to listen to it a few times free of charge without ad interruption. If you want longer access to the track, you should pay through subscription, download, or some ad supported model. The difference is that promoting new music and acquiring new customers for the bands & labels should, in my opinion, be entirely free. If anything, the labels should be paying me as an affiliate. People should pay to purchase, not to promote.

    1. Ethan Bauley

      BRILLIANT insight on the mechanics of this.The promotional aspect of recordings is such a huge PR driver for musicians…The whole system will have to get integrated so that listeners are getting bombarded with a 1:1 ad-to-song ratio…

    2. davidporter

      The 3x/listener stream limit via widget would enable this, for one.

    3. fredwilson

      joe, that would be great if the rights holders would allow it. i didn’t propose it because i think it’s a non starter. but it makes all the sense in the worldfred

  23. gumby

    Problem is, once it’s streaming it’s DRMed again — no making a ringtone without “permission” no ripping it as a background to your private slideshow or video, etc. And the crappy flash players each have their own UI — what a pain in the neck!I’m relieved there was no flash on the iphone because it caused a bunch of sites to upgrade to a more browser-independent format (“best viewed at ” (e.g. “600 x 480”) is so old-skool). Do we really want this stuff to only work on platforms to which Adobe has deigned / managed to port Flash? That’s stopping innovation in its tracks, Fred.

  24. evolvor


  25. Leigh

    Radio has always had its place and while this might be the evolution of radio, i have doubts of it being the ‘future’ of music.In the words of Gil Scott Heron, “the revolution will not be televised. The revolution will be live.”(Jay Z Live Nation deal anyone?)

  26. Bryan

    Hey dude, I’m totally in agreement. I write practically a manefesto on the future of free, streaming music a few months back, and it looks like its happening sooner than later:

  27. olie

    “There are places and devices that can’t get high bandwidth wireless Internet access, like my macbook pro which I am writing this on the plane ride home to NYC” FYI, several airlines now offer (or are experimenting with) wifi in-flight. “Soon!”

  28. steve

    There clearly needs to be a great deal of cooperation and vision from the record labels. Entertainment companies don’t really seem to see that what starts with music, eventually hits the TV/movie platform as space, bandwith become faster/cheaper. The user should have the option of a pay per stream, or forgo it for the inclusion of advertisements. For this, one must consider everyone; from high schoolers making a mix tape (ala song list) for a friend, to college students, to generation Xers sitting in their living room. What is going to be the easiest approach. I think a yearly subscription to the “music universe” or recurring credit card payments totalling their usage would make the most sense.

  29. eldsjal

    @Fred: So how do you think Spotify matches up to what you describe?

    1. fredwilson

      if spotify is a platform, that is fully licensed, and extensible via an open api, then it’s damn close.fred

  30. Kendal

    Fred,Great point. Tonight, as I study for final exams (im in Canada), I googled “study music” and then “music to study to”. I was looking for a streaming playlist, but could find nothing (besides a rhapsody one, which doesnt allow Canadians. I was hoping someone did a blog on this and it would be on Hype M, but to no avail. Having streaming music would be so beneficial for something like this. I guess I can go to my last fm, pick something chill like JJ or elliot smith, and listen, but its not the same.

  31. Ingo

    The direction of music as you describe it makes is exactly where it needs to go. The internet and its continued advancement in technology are just the tool required to deliver what the music business has required for 25 years. It never made fundamental sense that 5 or 10 labels and some big radio stations decided what is good music and what the masses should be able to hear. The internet has finally started to liberate music and artist in every genre around the world. I look forward to the day when millions of actual music fans determine the best seller list because then it will represent the best music in the opinion of the people who listen to the songs. The internet is just the first step, as brilliant musical talents everywhere are encouraged to share their talent via the internet all kinds of new and previously supressed talent will have their day in the sun.Good bye to the the labels and Wal-mart being the only so called source of Top 100. Welcome to the age of the artist.

    1. fredwilson

      This comment was reblogged in its entirety yesterday on a tumblog I have never read beforeCommenters are becoming bloggers whether they want to or notI love itFred

      1. Ari

        Thoughts on the Wall Street Journal piece today on high tech advice to the next president:

  32. willz

    I find it silly to predict the streaming and downloading cannot co-exist. They are both useful depending on how you want to use the music. The co-exist now and they will co-exist in the future. They coexist just like renting a house will coexist with buying a house.

  33. Sachin Rekhi

    I totally agree with your vision for where the music space needs to go. Currently innovation in online music has been hampered by the inability of innovative technologists to get unfettered legal access to the media they desire.Have you had a chance to check out the recently launched imeem Media Platform? I think this is an important first step in getting closer to your vision. imeem now allows third party developers to create applications on imeem that leverage all of our content licenses. At imeem, we have done the hard work of getting deals with the 4 major labels as well a many indies and now want to allow developers to reap the benefits. We hope to encourage music startups to start their innovation on imeem, where they are safe from the legal hurdles they will face if they venture off on their own.Hopefully we’ll soon be able to get to your vision of access wherever you are!Sachin

    1. fredwilson

      i was not even aware that imeem had launched a media platform that allows third party developers to create applications that leverage all of imeem’s content licenses. the one thing that makes me nervous is “create applications on imeem” part. i think the applications should be able to exist anywhere and everywhere.fred

  34. Michael Christoff

    Fred, you missed the 3rd big thing that happened in the music industry this week… Douglas Merrill taking over as president of EMI. I hope this a sign of good things to come.

    1. fredwilson

      I sure hope so but innovating is often easier from the outside than the insideFred

      1. Michael Christoff

        We’re working on that part =)

  35. jackson

    I listen to the radio in the car, I listen to records at home. If this is the future of music as a whole, and not just radio (background music fro the office, whatnot), then I quit.I will ALWAYS want more than the ability to hear a song. I want a package.Screaming in the wind I guess.No, you cannot borrow my 180 gram copy of Black Sabbath Volume 4, go stream it…..

    1. fredwilson

      Nothin’ wrong with streamin sabbath v4. I’ve done it a bunch. With my bose headphone, it rocks!Fred

  36. mndoci

    As a sometime musician with a few friends who would like to earn a living making music, I am not sure whether what we need is a YCombinator style investment model or an Amazon-style ecosystem for distribution and payments. If musicians could be plugged into platforms which allow them to write music, distribute it in various formats and earn revenue. Of course, these are not mutually exclusive scenarios.

    1. arthole

      Have you tried

      1. fredwilson

        YupBut I really am not interested in files anymoreFred

  37. arthole

    I think you are wrong. if you can stream it, you can rip it. so will you rip music you want in your car? of course. that’s what you do now with your ipod/laptop right? when you go running how will you stream music? what about djing, or just playing your favorite tunes at a party? never mind that perfect mood music for a little love making…”just a minute honey, stupid ‘’ stopped carrying Barry White…I’m trying to find another service and sign up… hey where’s the visa?”unless your mythical streaming server has all “your” music, it wont ever work.and here is the other thing. Hard drives and bandwidth costs go down down down, while while hard drive storage and bandwidth speeds go up up up. At some point, why not just have all of recorded music on your laptop?Besides, what everyone wants is to enjoy songs they like, and find new stuff they want. And finding new stuff is always about other people. Myspace is great for that because your friends friends friends know some cool bands you’ve never heard before. And you like them. Wouldn’t it be great to listen to that album on your next drive to grandmas house?You want to have music to use it where you want. Streaming doesn’t benefit the user MORE than downloading and owning does. It actually is more difficult to stream than to own. Just like DRM is more difficult than MP3.Why would users opt for streaming when they could download? I know where all my music is. It’s in my itunes. I know where my documents are. they’re in my home folder. I know where my code is. I know where my pictures are. I know where my movies are.It would suck to have 8 different services “streaming my music” when I just want to hit “random play” for my music.I like streaming. I’ve been listening to streamed radio from japan. Hopefully I’ll hear something I really like and then I will begin the hunt to find where I can buy or download it. Of course, I could just rip it from the stream, but I want the artist compensated. I want that artist to make more cool stuff I like. I want to own it. I want to be fan. I want to buy the tshirt.If streaming really worked. It would have happened in literature a long long time ago.So honestly. If storage were not an issue. Would you rather have all the music you liked on your hard drive or would you rather stream it from somewhere? Which would you choose? Sure you want to hear some things once or twice (stream). But for the stuff you want to hear now, and all day tomorrow, and send to your friends, and listen to while skiing next year, and maybe listen to with your kids. You want to stream that stuff? REALLY?huh. good luck with that.

    1. fredwilson

      Different strokes for different folks. But I already opt for streaming when I own the song and its on my ipod and laptop. Streaming is way more social than listening to something in your libraryFred

      1. Howie L

        Well this is extremely late to the conversation….but there are compromises, like (stream your own personal iTunes for free, unlimited, anytime anywhere).I’ve started using it and love it.

    2. qwang

      People will always split their listening time between “play what you want” and “discovery mode”–where innovative channels look for ways to connect to music they are highly probably to buy. The industry must find a proper balance between sales and promotion which is why streaming will still serve a powerful purpose. The trick is finding the right platform and policies which maximize promotion while minimizing cannibalization. I bet this is the quintessential trade-off that is top-of-mind for many label execs when thinking about online distribution.

  38. Adam Hodgkin

    Some follow up on what this type of publishing environment would mean for books and printhttp://exacteditions.blogsp…In the world of print the library function is analogous to what you identify as the ‘radio’ future, where every one creates their own radio station. It might also be seen as a music library because I reckon that the preservation and classification aspects of the collective effort will be very important.

  39. Jeff Grill

    Pandora has an interesting streaming model that combines the desire to listen to known artists streamed with similar unknowns.

    1. Pierre

      I agree. I use Pandora sometimes but I usually Last.FM and Rhapsody daily. I LOVE IT! Once I hear something on or through another service like Hype Machine I can immediately go to Rhapsody, track down the artist and dig into their entire catalog and become a full fledged fan. Easily.Terrestrial radio needs to figure out how to combine the best of those models and combine it with personalities that are able to reach out and touch people in their markets. The deal was a harbinger of that.It may be in about 5 years or so once the wi-fi, 4G or 5G roll out is more widespread in order to allow data interchange from listener’s in cars to the radio station… but once they are combined we will see something very cool for the casual fans. The personal connection is important and that’s one thing the digital services are overlooking. I don’t mean cheesy worthless DJ’s that annoy, but there’s a place in the new world for the Rodney Bingheimer’s of radio that know music and are interesting folks to listen to.Hard to say if the big broadcasting companies outside of CBS Radio are focusing on that particular future with the intensity they should be right now. From looking at their current offerings it seems that they aren’t. It’s possible for them to take a few steps down that road today but I don’t see it happening yet. I started my career in radio so this is particularly depressing to me. I’m not in that biz anymore but watching that business go off the rails in such a slow and deliberate fashion is like watching a relative die of starvation because it’s too lazy to walk to the refrigerator. It’s just so unnecessary.Maybe the big broadcasters already missed the boat. Maybe it’s in the cards for the fine folks at, Rhapsody, iMeem or Hype Machine to take it and run with it. Rhapsody has a guy named Quincy McCoy over there who gets it so I can’t wait to see how they look down the road. They are big enough to do some cool things without being hampered by the same restrictive licensing issues that most other services have to contend with. As everyone knows, licensing IS the devil in the details. Even if you have the licenses from the labels for your current biz model it doesn’t necessarily mean the license covers the next incarnation of features you’d like to add. It will take a big company like Real or CBS to run amok and push boundaries.No matter what, there’s going to be a lot of very cool new ways to consume music that makes it easier to discover and enjoy it while paying the artist fairly.

  40. Christien

    Oh, the endless possibilities of streaming media!! Love it!

  41. Jshap

    Fred-Compelling perspective, thanks. Does your vision of a fully-licensed music platform extensible via an open api extend to the future of Online Video streaming of professional-production content? (Will studios and networks open up (their current online presence is encouraging)? Will viewers become the most powerful distribution points for video making sites like Joost and Vongo a dime-a-dozen?)-Joe

    1. fredwilson

      I am less sure about video because it requires a level of user engagement that audio, particularly music, does notFred

  42. Pierre

    Video is a whole different ball of wax. I like the direction the television business is going in with Hulu and their other initiatives. They seem to be more open minded than the music companies.

  43. mfish1

    Great points…I already have 1000’s of radio stations on my smartphone from downloading a great piece of software called RESCO radio… with my bluetooth headphones they sounds great…at the gym I use my motorola Q with my 4gig card to listen to music…totally wireless.finally i have 1 device that does it all..sure it doesn’t have an iphone interface..but who cares…it’s 1, tv, internet, phone, IM,

  44. Kevin Kertes

    Fred,There is also another point that you missed in this post. In part, what you’ve written about is true, but I believe the future of the record business goes beyond the experiences you’ve listed above.I’ve written about it here.

  45. KeithCowing

    Also, don’t forget the importance of live shows. Some artists are already giving in on MP3’s, distributing music for free, and focusing on promoting live events. There is a lot of money in the concert biz and nothing can ever replace that. Historically, concerts were used to promote record sales. Maybe in the future MP3’s and streaming services will be used to promote concerts.