Online streaming is the way to go?

This article titled Daniel Ek’s Spotify: Music’s Last Best hope from a July edition of Bloomberg Businessweek on Spotify is a real eye-opener for me. First of all, I have never heard about Spotify before, for all my ignorance on the world of online music streaming. Second, the experience of Spotify gives us a powerful example of discovering profitable business model out of what seems to be a dead end. By the way, this is usually impossible without a certain level of passion involved.

Link to the article here:

Daniel Ek’s Spotify: Music’s Last Best Hope: The Swedish streaming service, about to make its U.S. debut, may be the industry’s best shot at remaining profitable and relevant

To sum the article up, the biggest challenges to Spotify are 1. to maintain a highly reliable and stable service, which the company already do quite well; and 2. to convince people to stream/rent rather than to own, which is both critical to Spotify’s future and extremely difficult. Some of the largest markets for the music industry, namely North America and Asia, are still considerably conservative with strong “collection” mentality, as mentioned in the article. In these markets, people still love the feeling of having CDs on their shelves (as in North America), or carrying a 150GB mobile hard drive brim with illegal downloads around (as in China). Money is not the critical issue here, habit is.

On a side note, animes are actually being distributed in a very “spotify” manner in Japan: free, fast, and straight to your cell phone. Check out Niconico douga’s anime section, for example, it is really something.

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