The Evolution of Music as a Service (MaaS)

14 min readNov 18, 2016

Something remarkable is happening in the 21st century. Recorded music is becoming less of a product every day and our relationship with recorded music evolves right alongside it. Music as a Service (MaaS) represents a new form of consuming music. People all over the world are consuming music via online streaming sites and apps including Youtube, Spotify, Deezer and Apple Music.

Music streaming affects our everyday lives — just look around you and you will see the familiar sight of people wearing headphones and listening to music. This points to the idea that music is important to us, both individually and on a societal level — It mirrors our emotions, energises and inspires us.

Music streaming has shaped the technological landscape of today through the devices we use and the ways in which we enjoy music. So how did we get here, how does it affect us day to day and what’s next?

The Beginning

In the beginning music was a service — It could only be consumed by listening to it as a live performance. No one alive today remembers a time when you could only hear a piece of music if you attended a live show.

The Phonograph

The phonograph was invented by Thomas Edison in 1877 (makeuseof.com, 2015). This was done by storing recorded music on wax cylinders which became vinyl. At this point you could own and collect music without ever having to see the artist play live. So the traditional service of music (live performance concerts) became a product (recordings). (Doydon, 2013).

Radio

It is believed that the first radio broadcast was aired on christmas eve, 1906, by Reginald Fessenden from Brant Rock, Massachusetts. He used an Alexanderson alternator and a rotary spark-gap transmitter. This was broadcast to ships at sea, and consisted of Fessenden playing O Holy Night on the violin and reading a passage from the Bible. (The Cat’s Whisker, 1973).

Radio technology was then brought to prominence by inventor Lee deForest in 1910 when he hung microphones above the stage in the Metropolitan Opera House. He proceeded to broadcast tenor Enrico Caruso to New York City. This marked the first public broadcast in the US and ushered a whole new wave of public radio broadcasting. (Koestler Ruben, 2010)

Another important development in radio technology took place in the middle of the century: The invention of the transistor. It was invented at the infamous Bell Laboratories in 1947 by Shockley, Bardeen and Brattain.

The transistor quickly influenced the design of radios, making them small and more portable, so portable music became a reality. In the 60s and 70s, these radios were built and distributed worldwide, bringing portable music to prominence in the wider public (Ganapti, 2009). The transistor opened the door to the future of digital music.

The Tape

The tape was first released by Philips in 1963 (Philips.com) and the success of this throughout the 60s was followed by the invention of the portable tape player in 1979, by Sony (Sony.com). This is a significant invention because it introduced portable music as a personal music medium for the first time.

The portable tape player fundamentally changed how people consume music as a product. They were now no longer confined to large home systems and the double headphone jack on the player even allowed listeners to enjoy music while out with a friend.

CDs and The Walkman

In the early 1980s the first commercial compact discs (CDs) appeared. The first popular music release on CD was Abba’s album ‘The Visitors’ (LEM, 2011) and the first compact disc player entered the market in 1982 also, released by Sony (Sony.com). CD sales surpassed Vinyl and cassette sales in the 1980s and became the most popular form of music consumption at that time.

In 1984 the Discman was introduced to the public by Sony but it did not become popular until the mid 1990s because of the Electronic Skip Protection that was later built in. In 1999, they canned the name ‘Discman’ and renamed their portable CD player the ‘Walkman’. It finally gained vast popularity worldwide due to it’s convenience and truly drove vinyl and cassette sales out the door (LEM, 2014).

The Rise of the MP3

In 1982, an engineering PhD student at University Erlangen-Nuremberg namedKarlheinz Brandenburg was presented with a challenge from his thesis supervisor: To come up with a way to translate music across a digital phone line. In 1995, Brandenburg succeeded in making the encoding software and the mp3 was born. He soon realised that it would be of great use to the growing internet and realised the immense advantage this would have in music. It is believed that an English entrepreneur asked him the following question:

“Do you know that this will destroy the music industry?”

Clearly he knew not what the sheer extent of their invention’s impact would be.

Their encoding software, which was used to create mp3s, was bought in 1997 by a student from Australia with a stolen credit card. At this point, Brandenburg told NPR in an interview that he “got the impression that the avalanche was rolling and no one could stop it anymore.”

The encoding software was distributed as freeware by the college student and inevitably led to the beginning of peer to peer file sharing. (Makeuseof.com, 2015).

Napster and the beginning of P2P file sharing

Just two years later, in 1999, came the birth of the infamous P2P mp3 sharing company, Napster. Napster, although only around for two years, acquired a user base of 25 million people by the time it shut, mostly consisting of college students. It is reported to be the fastest growing company in history, even beating tech giants Facebook and Google (Evren, 2015).

This free music distribution sparked outrage in the music industry and after three largelawsuits from artists Dr Dre and Metallica and the Recording Industry Association of America, Napster finally shut it’s doors for good in 2001 (Campbell, 2010). File sharing still exists today with popular companies like BitTorrent and Pirate Bay, but these companies are being shut down where possible — The founder of KAT.ph was arrested in July 2016 for copyright infringement (Ernesto, July 20, 2016).

Apple’s iPod and iTunes.

Following the growth and popularity of the mp3 in the early 00s there was a burning question on everyone’s mind: ‘Where do we store mp3s and how can we start to monetise mp3 distribution?’

In 2001, Apple had the solution. The Apple iPod debuted alongside the first version of iTunes, which was labelled “the world’s best and easiest to use ‘jukebox’ software.” (Apple, 2001). In 2003 came the release iTunes 4 which had the iTunes Music Store. This was the beginning of Apple’s entry into music sales.

The Move Forward

The Streaming Revolution: Pandora

It’s not easy to specify the first ever music streaming service. However, Pandora definitely was the biggest early music streaming service. Pandora was launched in 2005 by Tim Westergren, Will Glaser and Jon Kraft (Morris, 2016).

Rather than filtering songs by genre, it’s goal is to use a Music Genome that has more than 400 attributes, including melody, form, harmony and composition. The Genome works on a detailed analysis by real people from 10,000 music artists over the past 100 years. This analysis continues today and the library currently holds over 500,000 songs from 200,000 music artists worldwide.

Pandora is currently only analysing popular music styles, however, and has not yet branched into Latin or Classical music. This is because it is too complicated to carry out in-depth analyses that would provide accurate filtering on these intricate compositions. (Layton, 2016).

Pandora pioneered the music recommendation services that are at the heart of streaming today and it was the first glimpse into the ‘freemium’ model where users can listen for free with ads or buy a paid version to remove ads. Pandora essentially shaped these trends, leading it to become one of the biggest movements in modern music consumption.

There was a lot of criticism from music artists and labels at this time due to an immense drop in revenue caused by the move forward into streaming. Pandora publicly released its payment system in 2012. It stated that it did not pay artists, rather, SoundExchange, which then distributes 45% of net royalties to artists. Half of said royalties went to the labels and the other half would eventually find their way back to artists through the accounting system (Peoples, 2012).

Streaming Takes Off

2007 and 2008 brought the launch of a number of artist-friendly streaming sites, the most popular of which were Soundcloud and Bandcamp.

In December 2007, Soundcloud launched as a free streaming site that allowed users to upload, share and listen to songs completely for free. It’s unique selling point is that it introduced the concept of communication between artists and fans (Gil, 2015). Any user could comment and give feedback on tracks uploaded. It’s most popular today with remixes and exclusive content that artists want to communicate directly to fans, skipping out the middle man that is their record label.

Bandcamp launched in 2008 (Gil, 2015). It was inspired by Radiohead’s pay what you want model, a model whereby the band released their third album ‘In Rainbows’digitally, via their own website, and allowed their fans to set their own price to buy the album via online sales. (O’Brien, 2008, NME, 2012).

Bandcamp allowed artists to sell music at a set price, or by allowing their fans to set their own price, on a personalised landing page. At this point it also allowed artists to include their social media links on their personal microsite, a feature which reflected the movement towards social media networking. It is still most popular with independent artists, although Amanda Palmer notably moved away from her record label in 2010 and found more success on Bandcamp (Gil, 2015).

In 2008 Spotify launched. Swedish-founded Spotify is currently the most popular streaming platform with over 100 million active users worldwide, more than 30 million of which are paid subscribers (Resnikoff, 2016). Spotify has been disputed by artists, however, as the platform revenue for artists sits at less than 1 cent per stream. Taylor Swift pulled her music from the site in 2016 due to the lack of royalties paid. A bold move but losing a megastar was a huge loss to Spotify.

Drake, another top selling artist, has remained on the platform exclusively and withdrew his newer music from other streaming sites including Youtube. Drake was labelled by Music Business Worldwide as the ‘King of Spotify’ (Ingham, 2016).

Then we have JayZ’s recent venture — the streaming service ‘Tidal’ which he bought and rebranded in 2015. Tidal saw Beyonce stream her latest album, Lemonade, exclusively on the platform, generating over 115.5 million views in the first week of release (Barry, 2015).

Just 6 short months ago, in February 2016, Apple music launched. It already has an incredible user base of 10 million listeners. A similar trend is seen with Apple music. In April 2016, Drake released his new album ‘Views’ exclusively on Apple Music and nowhere else. This release set a new streaming record with 191.4 million views in the first week (Ingham, 2016). To date, it has clocked up over 1 billion views, the first album to do so on Apple Music (Vincent, 2016).

Below is a graph showing the top three most streamed albums in the US on their first week of release:

Most recently, in October 2016, Amazon Music entered the streaming market with a competitive price of just $7.99 per month for the unlimited subscription. Their main USP is tight Echo integration.

Streaming Today

So what does the music streaming landscape look like today?

87.5 million people are currently paying for subscribed versions of streaming sites worldwide. There are at least 200 million more listeners who are using Freemium versions of these platforms. Streaming is by far the most popular source of music consumption in 2016 (Resnikoff, 2016).

On November 1st, 2016, Sony announced a new set of numbers for its music division. Income from streaming shot up to 42% (up almost 10% from 2015). Downloads dropped to 18% and physical sales have stayed strong with 40%.

These numbers confirm that streaming is crushing digital downloads.

Why has music streaming become so popular since it’s introduction in the noughties? Some interesting statistics from Spotify include the following.

Music is streamed via Spotify’s smartphone app with 52% of listening time in 2015 done on smartphone devices. 10% of all listening time on Spotify came from tablet devices. (Smith, 2016). These technological devices allow for ease of access and excellent user experience on the apps and platforms provided by the streaming sites. Similarly, Spotify’s UI design was shaped by the devices we use.

Music streaming is convenient. CDs, tapes and Vinyl can be destroyed when moving house or travelling. Today, renting is better value in 52% of UK cities including the highly populated city of London (Connell, 2015) and by 2025, more people in the UK are expected to rent rather than buy houses (Property Wire, 2015). Streaming suits the mobile lifestyle of today’s average listener.

Streaming services are cheap. Spotify charges only €9.99 per month and only €5.00 per month for students for the premium plan. (Spotify, 2016). Although this strikes a minor chord with artists and labels, the general public will opt for a cheaper service over expensive products like CDs and Vinyl which are limited in their lifespan.

Streaming is instantaneous, appealing to the short attention span and FOMO often associated with today’s youth. From the moment you find out that your favorite artist has just dropped a surprise single to streaming it on your Spotify mobile app, only 3 seconds have passed.

Forecasting the future of MaaS

Music streaming trends have shifted with technological advances. The move from the walkman to the ipod to the smartphone have correlated with the creation of the CD, MP3 and online streaming. Music streaming will continue to adapt to these trends and innovations in technology, so what’s next in this relatively new and rapidly evolving digital music space?

Developing Artist — Fan Connections Through Streaming

One of the main unique selling points of Apple Music is the feature ‘Apple Music Connect’. This feature allows the artist and fans to connect directly through Apple Music and to share backstage photos, behind the scenes exclusives, messaging and it even allows the artist to send a song directly to the fan’s iPhone (Apple, 2016).

In the ‘Apple Music’ Press Release, Eddy Cue, the SVP of Internet Software and Services said “All the ways people love enjoying music come together in one app — a revolutionary streaming service, live worldwide radio and an exciting way for fans to connect with artists.”

Jimmy Lovine said “Apple Music is really going to move the needle for fans and artists. Online music has become a complicated mess of apps, services and websites. Apple Music brings the best features together for an experience every music lover will appreciate.” (Hershod, 2015).

Judging by Apple Music’s success in building its user base in the past 6 months, artists will continue to find new ways to build real relationships with fans through streaming services.

Live streaming has taken off in 2016 with social media platforms including Facebook, Twitter and Periscope offering users to go live from anywhere in the world. Artists are using this new space to give live performance concerts and Q&As globally from their living rooms.

Streaming Site Exclusives

The trend in artists releasing their albums exclusively through one particular streaming site alone will continue. Just last month, August 2016, Frank Ocean released his new highly anticipated second album through Apple Music.

Vinyl

Vinyl sales are at a 28 year high in 2016. They are up 32% to $416 million since 1988 (Morris, 2016). Fans are rekindling their love of Vinyl and millennials are discovering a whole new way to listen to music. Vinyl will most likely not come close to surpassing the popularity of streaming but fans will continue to enjoy the physical music product.

Video

According to Cisco, by 2017, video will account for 69% of all consumer internet traffic. Video-on-demand traffic alone will have almost trebled.

Spotify is currently exploring video and quietly launched their video features in 2016, after 6 months of beta testing. They’re currently testing Netflix-style content including music documentaries and cartoons (see video above).

Virtual Reality

Hotly tipped to explode in the next 5 years. Artists will use VR in their concerts, music videos, albums and at music festivals. Tech and music innovator, Bjork, released a VR music video for her single ‘Stonemilker’ in 2015. She staged the world’s first virtual reality and 360-degree live stream of her song ‘Quicksand’ in June 2016.

MaaS Rocks

There is a lot of competition between streaming sites in terms of content, pricing, features and usability. If you can only listen to Drake on Spotify and Taylor Swift on Apple Music, how do you choose which service to pay for? The answer is not simple or straightforward but the benefits to consumers overthrow the downfalls in revenue to the music industry. The future of streaming as a valuable source of music consumption is strong.

Music consumption started out as a service with live performance. It became a product with Vinyl, CDs and Cassettes and many people still love to have the physical product containing artwork, lyrics and real elements.

But although there is much conflict and imbalance between consumer wants and artists financial needs, Music as a Service has taken the throne and is here to stay.