2014: Year of the Streaming Service?


January 31 marked the Lunar New Year, ushering in the Year of the Horse. It will also be the "Year of the Streaming Service."

As I call it, the "normalization" of streaming will accelerate this year, as the continued proliferation of services drives more and more people to adopt streaming as their preferred method of consuming music. I think in many ways we're talking about a significant change in consumption patterns, and so it has taken time for people to come around to the idea. The marketplace is reaching critical mass and smartphone penetration is driving things. Consumers are increasingly aware of how they can use their phone as an entertainment device and are much more willing to change their behavior. (Spotify's recent change in allowing streaming to mobile devices as part of their free offering is a sign. To make money from their free service, Spotify must serve ads to their users, and all those eyeballs are now looking at mobile devices.)

With January's launch of the Beats Music service and the coming launch of Deezer in the US, as well as the continued evolution of Spotify, Rdio, Pandora, Slacker, iTunes Radio and Google Play, consumers will have more and more choices. Those choices will increase competition amongst all the services, forcing them to continue to innovate, tweaking their offerings to attract and retain customers. Given that customers are now more inclined to adopt a streaming service, they are likely to try several on for size and settle on one they feel satisfies their needs. In turn, those customers will get a big say in which features will become standard (as they vote with their ears and their dollars). This process, coupled with how the services manage their costs, will determine which can become dominate in the space.

All of this means that 2014 will be a pivotal year in the evolution of streaming services.