Are New Music Streaming Services a Threat to the iTunes Empire?

Once upon a time, physical media sales ruled the music landscape. Wal-Mart thoroughly enjoyed its reign as the largest seller of CDs on the planet. Then iTunes came along and took online music distribution from a niche to the most popular way for people to buy music.

Now a new breed of businesses are beginning to fill the landscape. Instead of offering single songs or albums, they give customers the freedom to listen to any combination of songs or albums they want, either completely free or with a low monthly fee. Are these services merely enjoying rapid but short-lived growth or do they represent the future of how we consume music?

Streaming Is Here to Stay

With the release of iCloud, you probably thought the rumors surrounding Apple launching a streaming service were finally over, you were wrong. The problem of course was, it didn’t seem that Apple was really launch a streaming service at all but was instead providing us with a much appreciated way to keep our music, apps and files synced across various devices.

My initial reaction was that this was Apple’s way of boldly staying out of the streaming game. Let Amazon and Google figure out their streaming services while Apple takes its own route and to help you listen to your music with your actual files, no streaming necessary.

However, now that we’re seeing the sneak peeks of iTunes Match, it becomes clear that there is indeed a streaming component. Not only can you download and sync files across devices, you can instantly stream all of the music that you own to your Mac or iOs device without downloading.

Even this though may not really mark the end of the Apple streaming discussion. What about music that you don’t own? A different model for music streaming is starting to make leaps and bounds in popularity and even more than Amazon’s cloud service and Google’s Music Beta, this one could represent a serious threat to iTunes’ music sales and even its core business model.

The New Kids on The Block

This new threat doesn’t seek to sell individual songs or even albums, instead they’re selling freeform access to a database containing almost every song ever recorded. For a small monthly fee you can listen to whatever you want, whenever you want (as opposed to a Pandora-like station where your influence is limited). Create a playlist with a few hundred songs, listen to them all for a while and then ditch it for a new list of completely different content. If you listen to a new album and hate it, switch to something else instantly without wasting a dime.

These apps look and feel like your personal iTunes library, the main difference being your personal library is nowhere near this expansive. With millions of choices all available instantly, there’s very little to not love about this new system.

Previously, Rdio largely owned this strategy in the U.S. but Spotify has finally hit our shores and is gaining ground fast with a free, ad-powered plan that is quite enticing to users who don’t want to dish out $5 a month to Rdio.

Both Spotify and Rdio are awesome services earning high marks from their customers. Both represent a fundamental shift from the old way of buying only the music want towards the new way, which instead lets you subscribe to all the music you could possibly listen to and more.

Will Apple Respond?

The biggest question I have about these new services is whether or not Apple will perceive them as a threat. The most dangerous part about being the leader in any tech sector is that you can easily get comfortable and wake up to find that the industry has innovated past you. After all, this is precisely what Apple did to the physical CD sales of retail giants like Wal-Mart.

The music industry seems to be willingly signing up for this new form of music access which could possible hold more potential for continual profits than mp3 sales or radio. As a happy customer listening to Spotify as I write this article, I can honestly say that I don’t feel a pressing need to actually purchase an album from iTunes any time in the near future.

As cool as iCloud is, in its current state it’s a response to a completely different question than the one we’re posing. However, I would wager that the folks at Apple aren’t so easily outmaneuvered. You can bet that they’re at least looking into the pros and cons of a streaming subscription plan. It’s entirely possible that iTunes could actually improve its monthly income with the addition of a Spotify-like streaming plan.

Testing the Streaming Waters

Apple recently made a tiny move in this arena and it perked up the ears of every tech blog on the web. The Red Hot Chili Peppers just came out with a new album and before it was officially released, iTunes offered customers an exclusive opportunity to stream the entire album once to check it out.

This is definitely a new trick for Apple to pull out of its proverbial hat and it has us all wondering what else they’re cooking up. The move is a full-on admission that the possibilities for streaming and iTunes together haven’t been explored anywhere near their potential.

What Do You Think?

Personally, I hope that Apple is indeed exploring options for streaming. As I’ve mentioned before in previous articles, I have little need for services like Google Music Beta, which seem geared towards letting me hear the music that I own when I’m not at my own computer or in possession of my iPhone or iPad, which is pretty much never.

However, I find the freedom of services like Rdio and Spotify extremely liberating. If my friend tells me about an artist that I might like , I can instantly pull up every album they’ve ever recorded and listen to them from start to finish at no additional cost than what I’ve already budgeted for the month. It’s as if this was how music was always meant to be.

I think if Apple is going to continue to rule music sales, they need to keep a close eye on innovations like these services and make sure that they don’t represent a significant threat to mp3 downloads. If they do, it’s time to plan the next major evolution of the iTunes store. If the Spotify business model works, it could be applied to music, movies, books and more in iTunes. An enticing thought to say the least.

Ultimately, all of this is pure conjecture at this point. Your guess is as good as mine as far as if these services are remotely a threat to iTunes and how/if Apple will respond as a result. Leave a comment below and share your thoughts on the future of music enjoyment. Will individual song and album purchases reign for years to come or will streaming subscriptions begin to replace an old and tired music consumption model?