The future of music radio

Some interesting thoughts on coming developments in the music business from VC Fred Wilson:

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 last.fm 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 last.fm and hypemachine. You may like Pandora. Someone else might like Jango. Your kid’s myspace page might have an imeem playlist on it. 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 last.fm 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 last.fm on their iPhones.

This is a pretty vivid illustration of how the parameters of our industry – and yes, these services are part of our industry – are changing. And changing fast.

And this change involves services which will be as ubiquitous as radio (online, anyway – or on mobile – or on any Internet radio on a desk or in a car dashboard near you), which will compete with radio for ad dollars, which will plus the radio experience with control and customization and a social experience, and which will care not the tiniest bit about Arbitron ratings.

Consider, too, Fred’s point that you will be able to listen to tunes you don’t own (iTunes, after all, is all about ownership) on-demand without paying for them. As this mechanism becomes easy and widespread, the necessity to own the tune vanishes. Because why own something purely digital you can experience whenever and wherever you want easily and for free without owning it (unless your goal is to avoid advertising – and good luck finding a big market for that)?

What we are going to see is increasing friction between the “one size fits all” style of music radio and the “my size fits me” style which will characterize the hundreds of online “radio services” Fred is talking about.

In the long run, pleasing most of the people most of the time via music radio is a fool’s errand. The “lowest common denominator” of music radio will sing its swan song as it ages with its core fans, just as the print version of the newspaper is doing.

What Fred’s describing will only get easier and more popular, folks. And as it does, the radio industry will be forced to acknowledge that streaming the analog station over the Internet is not the same as developing a “new media radio service.”

In the long run, the future of radio broadcasting – the over-the-air kind – will have little to do with music.

Wait and see.

The last time our industry underwent a technological shock of this magnitude was because of that box with pictures in your living room.

Don’t underestimate what’s ahead.

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