Cloud Wars Episode II – The Swedes Strike Back

Back in April I correctly predicted that Spotify would soon offer their mobile service to all customers, including free accounts, following their restrictions placed on non paying users; this is a huge step for them in the ongoing battle to get a full cloud service out there. To be clear, this update does not allow non-paying users to stream music that they do not own – only the tracks they have synced from their personal computer to their device. The desktop version of Spotify has been able to sync a users owned music over WiFi to a the mobile device for some time, a smart move on Spotify’s part to save streaming bandwidth costs. This new update now includes iPod syncing, something that has required the owners to always be tied to iTunes. Today’s announcement is really significant in terms of getting users into the Spotify ecosystem and in my opinion really puts Lorentzon & Ek’s company out there as the leaders in the cloud race.

Apple, Amazon and Spotify already account for 90% of  worldwide digital music revenues for and I think this move could prove to be a significant shift in Spotify’s publicised revenue problems if they can get customers to move away from Apple. This is all the more likely given their pending US launch and the hype around the lack of launch for the last yeat. Having worked on the original purchasing implementation, which was powered by 7digital, it was actually quite interesting to see how many purchases were made through it when users could still listen for free – it really points to users’ preference to own their music over the “rental” streaming model.

I think the most interesting outcome from all of this will be the backlash reaction from Apple. In the past, Apple have changed the way that music is stored on iPods during software updates to prevent third-party software from being able to move music onto the device. It wouldn’t take much for Apple to do this and I wouldn’t be surprised if the next software updates will cause problems for the engineers  over in Gothenberg & Stockholm.

The other question surrounds the iOS app and whether Apple will allow future updates to it or if they will even just remove it from the app store entirely. At 7digital we’ve struggled to get our iOS app through the submission process; an app that does considerably less to compete with iTunes and the iPod compared to that from Spotify. Unless Spotify has an agreement with Apple – which I find highly unlikely, I wouldn’t be surprised if the app store guidelines change to say if your app name contains the word ‘Spot’  and your logo is green then it can’t exist in the app store.

On top of this there is the well documented case of Apple wanting 30% of any app subscriptions which would effectively ruin Spotify’s model as they will not be able to operate on these terms. I guess the ball is now in Apple’s court.

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Late 2011 Music Industry Predictions

It’s probably a bit late on to be making predictions for the year, but we haven’t really seen any major announcements yet, apart from that small one by Amazon the other week.

Amazon Cloud Player and Cloud Drive

Amazon Cloud Player and Cloud Drive

Amazon

So we were all pretty surprised when Amazon announced their Cloud Player/Cloud Drive online locker service, with all the expectation and talk focussed on other services it just crept up out of nowhere and sprung itself on us.

I’m sure they were in talks with the labels and publishers to do this all along but given the to-ing and fro-ing  shenanigans of the music industry I guess they thought it was simpler to fire a warning shot to wake them up and get something moving. As has been the case with a number of services in the past it seems easier to offer an apology and seek forgiveness than to seek permission in the first place.

It’s a good service at it encourages users to purchase music in exchange for additional space in the cloud, something which Amazon have available to them in abundance. I see more users being swung to using the Amazon service than having to pay an annual subscription.

Prediction 1: It’s a far from an ideal service as you have to upload your music collection to the cloud to use it and on standard asynchronous broadband connections that would take an age for a decent sized music collection. I think they will introduce some sort of matching service that will just add content to your locker if it identifies it on your local system. I think they need to seek forgiveness from the music industry for launching the cloud locker before doing this or it will surely create havoc.

Prediction 1a: I keep banging on about an Amazon device and I see this as just another sign. Expect it before the year is out.

iTunes

iTunes

Apple

It’s been much talked about since the purchase of Lala and the rumour mill is always turning about their cloud service. MobileMe is supposed to be  the vessel for this service although knowing Steve Jobs it will probably be some new hardware that you push into your inner ear and is controlled by thought alone. This will likely be a US launch initially with a couple of months before worldwide roll out. This is likely to be a subscription service – MobileMe is already a subscription service at $99/£60 per year.

I think the interesting thing here will be about how Apple view this service. If it is just going to be something to encourage the sale of more hardware then it will be quite vanilla, like Ping. If their plan is to encourage the sale of more content, then I would be interested to see if they release apps for other platforms (Android, Blackberry and Windows Phone 7) to allow non iDevice users to get their music, videos and iBooks on the go. It does seem counter-intuitive but I do think that this could encourage sales of other products like Apple TV which is where I see one of their next major pushes – especially as they are never going to win the mobile OS war. It’s also unlikely to happen in the near term as it will harm their app strategy to move themselves on to Android when they are encouraging all to develop for iOS.

Google

Google

The last of the three big hitters, or AGA as they are collectively know at 7digital, have been rumoured to be launching a service for about a year now. They seem like they have been stifled by the music industry, like everyone else. We’ve seen screenshots of a leaked music application showing the ability to sync music content in the cloud although very few other innovative features have been shown.

Prediction 2: There are talks of the launch going ahead very soon without agreement from Warner so it’s likely to be launched at Google I/O in May. Like most Google products this is likely to be a US only service at launch which will probably not launch globally for some time, if at all. I doubt that it will be anything special compared to everything else available. I imagine it will be a big bang launch and get a lot of hype because it’s Google but will quickly fizzle out with more innovative services out there that can offer better curation of content and frequent service updates with newer features.

Spotify

Spotify

Spotify

Spotify have been trying to get into the US for as long as I can remember. They have apparently paid all the necessary advances to the four majors and have got the signatures to do it, but something is holding them back. I think the music industry has probably been trying to tie the launches of Apple, Google, Spotify and Amazon together so that no one gets an advantage as the first mover – which is all moot now that Amazon has broken ranks and made a run for it. I’d expect to see Spotify go state-side in the next couple of months.

Prediction 3: It was interesting to see that Spotify has reduced their service to only allow 10 hours listening per month for Open account subscribers. Aside to it being aimed at getting hooked users to move onto one of their paid subscriptions, this could also be due to a few other things; an agreement with the labels for the US launch, a cost saving exercise for US launch in case of high demand or …. wait for it…. the start of what I think will become another cloud based service. They currently only allow you to stream your own music on mobile devices with premium account but I can see them offering a free service. With the option to play your own music plus 10 hours per month of free streaming as a way to listen to music that you don’t own. I imagine the music industry will like this as it should encourage purchasing where users want to be able to listen to certain tracks unrestricted.

7digital

7digital

Obviously I can’t say too much about our plans for the coming year. We’ve had our cloud based locker since I joined the company back in 2007 so this years buzz word is all a bit old hat for us, but we’re looking to offer a bigger and better service to rival all of the above.

Earlier this year we announced our partnership with RIM on the Playbook  which is another big step forward in our aim of giving 7digital users access to their content whenever they want it and wherever they are.  We’re really focusing on being as agnostic as possible and making our service available to as many customers as possible no matter what device, what personal computer OS or what service provider they choose. Coupled with our territorial coverage this gives us some of the widest reach out there and gives consumers the greatest choice.

In order to achieve our goal, we’ve not only been partnering with device manufacturers, we have also been working on our own mobile applications, which are available from the relevant app stores:

  • Our Blackberry app has been available for some time now and that has had several refinements to support new Blackberry devices and improve performance as well as a number of great feature additions.
  • Our Android app launched late 2010 and allows users to download and listen to their purchases on the go. We have some great additions to this app coming soon, so keep an eye out for those
  • We’re still working on getting an iPhone app similar to our Android offering, into the app store. In the meantime, iOS users can always use our mobile optimised web store.
7digital Mobile
7digital Mobile

Expect some announcements from us soon….but that’s all I can say right now.