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IT Infrastructure, Hands On Linux

Music Streaming Services

A Brief History

Music streaming was first introduced in January of 1993 when Internet Underground Music Archive (IUMA) launched as the first free online music archive of MP3 downloadable songs. It allowed unsigned musicians to share music, communicate with their audience, and distribute their music to fans while avoiding record labels. This sounds a lot like the first version of SoundCloud ever created. Anybody could post their work onto this service for the world to see.

Jumping forward almost a decade to September 2005, when Pandora Radio launched. Pandora had a goal of using algorithms and a complex song sorting program to create personalized radio stations based on listener's preferences. It was one of the early glimpses into the "freemium model," where users can listen for free with ads or pay $10 per month for uninterrupted streaming.

SoundCloud launched in December 2007 as an online audio distribution platform that allows musicians to distribute their tracks for free. Adding a more social component similar to the music pages on Myspace, Soundcloud allowed artists and fans to communicate - artists could share music with fans with a simple upload of a file and fans could leave feedback on the tracks. Anybody can post onto SoundCloud. This is essentially a better form of the first streaming platform mentioned earlier; Internet Underground Music Archive.

Competition

Today, the most popular streaming services are Spotify and AppleMusic by a large margin. Spotify was introduced in October of 2008, aiming to tackle the issues of music piracy, offering a seemingly infinite, catalog of music for audiences to listen to. Rather than get paid per download, artists would receive part of a royalty payment each time their song was streamed. One of Spotify’s competitive features is the ability for users to create and share their playlists to a public or private platform within the service. Spotify's business model relied on driving revenue from 1) advertisements played on Spotify's free version, and 2) subscription fees incurred to access Spotify's ad-free Premium service.

Attempting to compete with Spotify, AppleMusic launched in June 2015. The launched started a shift in Apples music services away from iTunes where listeners would have to pay for each individual tracks, opposed to paying a subscription fee and having access to a seemingly infinite library of content.

Semantic Markup

Semantic Markup is defined as the use of markup language such as HTML to convey information about the meaning of each element in a document. There are 2 practices that enable semantic markup; 1 – It requires that HTML elements be used for their intended purpose. 2 – It requires the separation of content and presentation.

When writing semantic markup, we use HTML tags to tell browsers something about the contents of the element. The tags themselves become a way to tell a machine something about the meaning of the content. To write semantic markup correctly, we use HTML tags so that it is both readable by human and machine. As for the layout of the markup according to the site, we use HTML elements based on their semantic meaning, then use CSS to define the visual presentation of the site.

Search Engine Optimization

Search Engine Optimization (SEO) is a methodology of strategies, techniques, and tactics used to increase the amount of visitors to a website by getting a high ranking on a search results page such as Google, Bing, or Yahoo. Essentially, it is making webpages attractive to these search engines to get a higher placement on the search results and in turn attract more visitors to the site. The better a web page’s SEO, the higher ranking it will get on the search result listings.

In early days of SEO, web designers would put as many keywords as possible into web page keyword meta tags to improve search engine rankings. However today engines like Google ignore the keywords meta tag completely. Today, to achieve a high SEO rank a website must have high quality content. This means the site has appropriate title tags, original, factual, grammatically correct, and engaging content to users.

508 Accessbility

508 accessibility is legislation referred to as “Section 508”, which is an amendment to the Workforce Rehabilitation Act of 1973. The amendment was signed into law by President Clinton in 1998. Section 508 requires that electronic information technology is developed by or purchased by Federal Agencies be accessible by people with disabilities.

Section 508 covers all information technology; Computer software, hardware, and documentation are all covered by Section 508. Federal agencies must purchase electronic and IT that is accessible to employees and members of the public who are disabled. If two companies are bidding a government contract and only one is offering accessible solution, then the accessible technology should win the contract. Technology is deemed to be accessible if it can be used effectively by people with and without a disability. This doesn’t mean that a blind person should be able to complete an IT task as fast as a person with no disability, but rather, the processes must be comparable. Section 508 required that the Access Board define accessibility through a set of standards. To do this, the Board enacted the Electronic and Information Technology Access Advisory Committee. This committee is composed of representatives from industry, academics, government, and disability advocacy organizations. The group proposed standards for accessibility and proposed them to the Access Board. The Board thus created a ‘proposed rule’ and was finalized in December 2000. This final rule contains standards for accessible IT, which was officially put into effect in June 2001.

How They Relate

One of the main goals of any web developer is to have their website appear on the first or second page, and if possible, close to the top of the first page. The developer does this through Search Engine Optimization (SEO) techniques. Techniques such as high quality content, and effective Semantic Markup. Semantic Markup being the quality of markup language such as HTML written and readable by both human and computer. Having quality semantic markup is necessary to achieve the desired level of SEO.

Finally, to get a high ranking on search results page, a site must be developed and written according to Section 508. This legislation essentially requires information technology to be accessible by people with and without a disability. Obviously, a person with a disability will not be able to operate IT as quickly as a person without one, but the two operations must be comparable in effectiveness and the time it takes to complete a task. It is necessary that web developers follow SEO techniques, quality semantic markup, and compliance to Section 508 to achieve a high ranking on search engines results page. Getting a high ranking will bring in significantly more user traffic to the website, which in turn brings light to the topic discussed on the sight, products being sold, and in many cases, both.

Tech Brief

“In 2016, the music industry saw its first signs of true growth since the internet started ravaging it a decade and a half ago. By mid-year, labels saw revenue grow 8.1% over the same period in 2015, fueled mostly by an explosion in subscribers flocking to services like Spotify (40 million subscribers) and Apple Music (20 million). Indeed, in early 2016, we learned that streaming had officially become the industry’s biggest source of income in 2015.”


- John Paul Tiltow of Fast Company publishing
Overview

Music streaming has seen dramatic growth over the past 7 to 8 years. Similar services were first introduced in 1993 with the launch of the Internet Underground Music Archive. This was the first free online music streaming service where anybody could post their music to. Big artists and people recording in their basement all had the same ability to post onto the IUMA. Today, this service is most comparable to SoundCloud, which offers parallel services. The only real difference between the two is that IUMA had users download music onto their mp3, while SoundCloud streams music. Users are not required to download anything onto their device besides the application/service itself.

The Process

But what exactly is ‘streaming’? Streaming is defined as a method of transmitting or receiving data over a computer network as a steady, continuous flow, allowing playback to proceed while subsequent data is being received. Streaming is a constant flow of data to a device, allowing for a continuous flow, and for the user to begin watching or listening almost instantly. You don’t need to download an entire file before you begin using it. Another key characteristic of streaming is that the data isn’t stored permanently in your device until it gets deleted. Rather, data is automatically deleted after you use it. Audio and video isn’t saved to your device, and takes up virtually no storage; unless of course you choose to save the file for offline listening, which is a download. The only real problem with streaming is that it is subject to buffering if the device is connected to slow or interrupted internet connection. For example, if you streamed the first 30 seconds of a song and your internet connection drops before any more of the song is streamed, the song stops playing. If your internet connection is slow, the buffer won't fill up quickly enough, and the stream either stops or the quality of the audio or video is reduced to compensate.

How They Make Money

You may be asking yourself, how do these music streaming services like AppleMusic, SoundCloud, and Spotify make money? These services make money through 2 primary sources: Subscriptions and advertisements. An estimated 100 million people are believed to subscribe to music services, this number does not include free streaming services such as SoundCloud, YouTube, or AppleMusic & Spotify’s free tier. Subscriptions are generally $10 a month. That adds up to 1billion dollars in revenue a month for music subscriptions. This number is still generally small in comparison to the amount of music listeners who are still unsubscribed to a service. Considering there are 319 million people in the United States alone, there is plenty of room for growth in the music streaming industry.

Just about every music streaming service makes some of its revenue through advertisements. Spotify, SoundCloud, and Pandora among a handful of others offer their services for free at the cost of an occasional 30 – 45 second ad. Free tier services which AppleMusic and Spotify both offer act as a feeder to pay for its full service. AppleMusic’s free version however does not feature ads, but is only available for 3 months after download. Advertising revenue doesn’t bring in as much profit as subscriptions, making up roughly 10% of its total annual revenue, but makes money for these services nonetheless.

Expenses

Streaming services expenses include: General & administrative; which is the cost of employment, business locations, and regular business functions, sales & marketing, research & development, and cost of revenue. Cost of revenue is mostly chalked up to artist royalties, which is the largest expense of streaming services, making up roughly 75% of total expenses. The figure on the right represents average annual expenses for music streaming

All in all, profitability is still a challenge for the streaming business. Pandora has not managed to be consistently profitable, and Spotify, the largest music streaming service has never turned an annual profit. While companies like Apple and Amazon have other, more lucrative businesses to make up for some of the expenses of their respective streaming services. With as much money as these companies make on the surface, music streaming tangible costs ultimately weigh out the benefits.

Evolution

Long before music streaming, listeners would buy physical copies of an artists music, usually in CD form. CD’s, usually the artists full album, were and are still singularly more expensive than one month worth of a music streaming subscription; which offers a seemingly endless amount of music for less than the average CD album. This is good for the consumer, but bad for the music industry. In fact, many artists were against music streaming to begin with, but as it grew they had no choice but to put their musical work onto these services to turn profit. With digitally based streaming revenue steadily increasing, the physical record revenue is decreasing at about the same rate. Streaming revenue is increasing roughly $2 billion annually – in turn negatively affecting physical revenues. The current trend of streaming to physical record revenue will continue to follow its current pattern of more subscriptions, and less records. Although ultimately less profitable for the music industry, modern technology simply will not allow the physical sale of records to be profitable.

Competition

Today, the largest music streaming service is Spotify, with about 40 million paying subscribers. Just about every piece of music under the sun can be found on Spotify, making it an attractive service to users. The cost of a standard subscription to this service is $10 per month. One of Spotify’s defining features which previously set them apart from other services is their ability for the user to create a playlist, and share it to a public or private forum within the Spotify platform. Playlists could then be linked to social media websites like Facebook and Twitter. When a playlist is posted anybody can listen to it, and if it gains enough traction, it could even be featured on one of Spotify’s unique pages, easily accessible to any user. Spotify also features podcasts and custom radio stations, which is essentially the same algorithm based music service Pandora offers. Spotify offers a free trial which lasts 60 days, users are automatically charged for a premium subscription after 60 days unless the trial is canceled before the trials termination.

Spotify’s main competitor is AppleMusic, which has about half Spotify’s paying subscribers, at 20 million. Much like Spotify, this service has a seemingly endless amount of content to browse through. A standard subscription costs $10 per month. AppleMusic recently introduced a playlist sharing feature, must like Spotify, where users can create a custom playlist and post it to a public forum within the service. A defining feature of AppleMusic is their Beats1 radio station, which consistently features big name artist and celebrity interviews, only available to AppleMusic listeners. A major advantage of AppleMusic is that is that it is installed on every Apple device; iPhones, iPads, and MacBook’s. This creates easy access to an infinite music library for all Apple device users. AppleMusic offers a free trial version available for 90 days, like Spotify, users are automatically charged for a standard subscription unless directed otherwise by the user.

The biggest music streaming service that’s always free, is SoundCloud. SoundCloud makes its money primarily through advertisements, which usually come before songs with a lot of recent activity – popular songs. This service does offer a pro account which will disable ads, at $7 per month. Pro account users are very small compared to the music streaming giants of Spotify and AppleMusic, with less than 2 million. However, SoundCloud gets a much higher amount of user traffic than both AppleMusic and Spotify combined, even taking into account their free trial versions. These services combine to roughly 120 million monthly users, compared to SoundClouds 175 million monthly users. SoundCloud is different from other streaming services in that any user can post content onto the site. This is very appealing to new artists who are trying to build a fanbase. In fact, hundreds if not thousands of artists today started on SoundCloud.

Exclusive Releases

One problem that all streaming services have and compete amongst one another over are exclusive releases. This is when an artist released their music, usually a new album, on only one music streaming service. Jay-Z, Beyonce, Frank Ocean, Adele, Drake, and Kanye West have all done an exclusive release on one of the major music streaming services. Artists aren’t doing this simply because they like the service, they usually sign a deal with the company of a large dollar amount for the service to have sole streaming ability of the musical content. Exclusive releases are a source of competition among streaming giants, and usually anger the average user. Is dissatisfied as consumers are with exclusive releases, they don’t show any signs of stopping soon.

Conclusion

All in all, the music streaming business is big, and expected to keep growing for years to come. More people are moving away from the old brick-and-mortar way of listening to music, and to music streaming. It is simply ludicrous to purchase physical copies instead of streaming services under any reasonable circumstance. As large as music streaming has become, it is still difficult for companies like Spotify to actually turn a profit from their service. The industry does have much room for growth and will continue to grow for years to come, hopefully to pass the break-even point and see some profit for these music streaming services.

Sources

Peter Tschmuck; Music Business Research – The Economics of Music Streaming: Spotify
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Sam Costello; LifeWire – Internet Streaming: What it is and how it works
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John Paul Titlow; Fast Company – 7 Ways Music Streaming Will Change in 2017, After Another Crazy Year
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Dan Rys; Billboard – 2017 Streaming Wars: Will Spotify, Apple Music, or Amazon Dominate?
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Marc Hogan; Pitchfork – The Year in Streaming 2016
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Chance Miller; Apple Music vs the competition: How todays music streaming services compare
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Johnathan Ringen; Fast Company – Spotify, Apple Music, and The Streaming Wars: 5 Things We’ve Learned
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John Penland; HTML.com - Semantic Markup
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Susan Ward; The Balance - Search Engine Optimization
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Jim Thatcher; JimThatcher.com - Section 508
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