The Future of Online Music: Itunes vs Spotify

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KATHOLIEKE UNIVERSITEIT LEUVEN
FACULTEIT LETTEREN
The future of online music
Spotify versus iTunes
Michael Peeters Prof. Fred Truyen
Master Culturele Studies 2011-2012
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Contents
1. Introduction and overview 3
2. Spotify 4
2.1. Advantages 5
2.2. Disadvantages 6
2.3. Pricing 6
3. iTunes 7
3.1. Advantages 7
3.2. Disadvantages 7
3.3. Pricing 8
3.4. iMatch and iCloud 8
4. Conclusions 8
5. References 10
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1. Introduction and overview
Who remembers Napster? The pirate music killer that was told to bring down the entire industry by allowing peer-to-peer networks in which users could exchange songs with one another. It is 1999 and the first online breakthrough in music sharing takes the whole world by storm. Millions of users explore an online music world that earlier seemed impossible to contain. Big names in the music industry like Metallica and Dr. Dre, incensed by the new hype, file a lawsuit against Napster. Two years and a handful of verdicts later, the company is shut down and music artists celebrate in knowing that billions of dollars would have otherwise vanished in thin air. After that, other peer-to-peer programs popped up all over the Internet (e.g. KaZaa, Morpheus, Gnutella, LimeWire etc.), but unlike Napster they allowed all types of files being exchanged like movies, programs, games and so on. This shift kept them a lot more under the radar because they didn’t focus overtly on music. Together with some nifty loopholes and the quantity of files being swapped online, the music industry was fighting an already lost war.

Almost simultaneously a new type of file sharing made a big debut as well, the BitTorrent network. Rather than downloading a file from a single source server, the BitTorrent protocol allows users to join a „swarm” of hosts to download and upload from each other simultaneously. Up until today, BitTorrent has at any given instant of time, on average, more active users than YouTube and Facebook combined. Once more the music industry made a big effort to block these ‚malpractices’, yet again failed. In 2003, Apple launched its legal counterpart, the iTunes Music Store. The idea was simple - provide a virtual store where people can buy and download digital music ondemand, legally that is. In 2008, the company surpassed Wal-Mart as the number-one music retailer in the US. Apple has been able to secure that position over the years with impressive results (over 16 billion songs sold as of October 4th, 2011)1. Since Napster, the distribution of online music has undergone a process of evolution: user interfaces and online payment technologies continue to improve, while more and more music becomes available online. Selling music online – music which can easily be downloaded to a listener's computer and portable listening devices – has become a very 4

profitable industry.
That brings us to the latest chapter of the still early history of online music: streaming. MySpace, the first big provider of streamable music, was originally applauded by artists and music labels. Artists could make their own profile and upload a series of songs of their choice. They kept control over their own music but at the same time reached out to a whole new online audience, thus getting a lot more coverage than through the single medium of radio. It sparked the successful careers of famous artists such as Kate Nash, Lily Allen and the Arctic Monkeys.

Spotify launched in Europe in 2008, and opened up an unseen collection of music to streaming customers. The Swedish masterminds behind the company were visionaries as it seemed. They believed in ‚cloud computing’, - a term that’s well under way to become the buzzword for the next couple of years - the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices. Its most powerful feature is the superfluity of having music on your computer or mobile device.

Not only was this a...
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