There have been some interesting developments in digital music over the last few months. As the major labels are finally willing to look at alternate business models, new streaming music services have arrived. MySpace now offers unlimited on-demand streams of a large number of artist tracks for free and Pandora has recently released a client for the iPhone. Where does this leave digital purchase and download services like iTunes, Amazon MP3, and Walmart music? These music stores have been very popular since they offer the convenience of immediate gratification and allow songs to be side-loaded onto mobile devices. However with the addition of wireless networking into new devices, the game changes because now there are alternate methods of delivering digital content without first requiring songs to be downloaded to a local PC.
Of course there are pros and cons to the different approaches to delivering content. Streamed music gives you access to a large catalog of content (either from your private collection or from an online repository) and allows users to start listening to content without waiting for a complete track to download first. On the other hand, full-track downloads allow instant access to local content (no waiting for downloads to start over the network), offers offline access, and reduced battery consumption. When we think of the cell phone as a music consumption device, the battery issue becomes important. Given that the main use of a cell phone (communications via voice, email, and text) is critical for most people, having some service drain the battery on your phone can become an issue. If your iPod drains, you don't have music for a while... no big deal. If your phone is dead, your ability to communicate is severely limited.
From a business perspective, the streaming model still offers challenges when it comes to generating revenue, since royalties must be paid on a per-stream basis. Subscriptions are one solution, but we will have to wait to see if consumers embrace this model, given they have become accustomed to downloading and owning content, especially when it comes to mobile devices. I suspect (free) streaming will continue to gain in popularity on the web, but full-track downloads will be the method of choice on mobile devices for the foreseeable future.