Anthony J. Pennings, PhD


Music’s Year of the Cloud

Posted on | January 12, 2012 | No Comments

I’m heading to Hawaii this January to talk about how cloud computing services and mobile technologies are influencing the music industry at The Pacific Telecommunications Council’s annual conference (PTC ’12: Harnessing Disruption: Global, Mobile, Social, Local).

I’ve had some help from my wife who, when she is not marketing green tea for Ito-en NA, is a semi-professional hula dancer. She has been listening to Hawaiian music on her iPhone and uses a program called Pandora. This service streams personalized music on your computer or mobile phone. When you type in a name of an artist, band, composer, or just a song, it begins to build a playlist of the music you chose and even more music like it.

iphone playing pandora

The last year has seen some interesting changes in the music industry with the maturation of cloud and mobile services. Established companies like Amazon, Apple, and Google continued to develop their music “digital locker” services that allow people to store their purchased music in a cloud server that they can access from multiple devices.[1] More intriguing are a number of new companies that have sprung up like MOG, Pandora, and Spotify that stream music like a personalized radio station.

The “cloud” is a metaphor for the massive data storage, processing, and transmission capabilities connected to the Internet and wireless services that can be accessed on mobile devices. They get their name from the cloud-like symbol that’s often used to represent the Internet in network schematics and flowcharts. These are the cloud computing technologies that power Google docs and other “recombinant” software-based services and digital platforms for global e-commerce.

So we can point to two distinct cloud offerings for the music industry at this time. Amazon MP3The first is the storage and streaming services such as Amazon’s Cloud Drive and Player, Apple’s iCloud, and Google Music. These services sell standardized MP3s or 256Kbps AAC DRM-free copies and allow you to store albums and songs on their servers and access them through a variety of consumer devices (iPods, iPads, Droid phones, Samsung Blue Ray players, etc.) and computers. They have yet to reach licensing agreements with the major music labels to allow them offer streaming of unpurchased music. Apple’s iCloud specifically advertises itself as “Your content, on all your devices”.

The other cloud service having a major impact on the music industry are those that enable streaming subscription services such as MOG, Pandora, Rdio, and Spotify. They allow consumers to sign up to listen to streamed music they haven’t personally bought. In general, they work off a a “freemium” model where you can get free music with some advertising or a premium paid service with no advertisements.

These services generally use recommendation engines, software applications that build models of a user’s preferences, in order to provide the types of songs they would like. These are used in a number of e-commerce platforms such Amazon and Netflix. Recommendation engines for example are updating algorithms and increasingly utilizing social data points to develop a referral systems connecting grids of personal contacts.

Both strategies will rely heavily on social commerce and its enhanced marketing, search and transaction capabilities. Logging into MOG for example, you will immediately be asked if you MOGwant to sign in using Facebook. That immediate access to some 800 million potential subscriptions has resulted in extraordinary growth for MOG and its 13 million song catalog. MOG collects the information you share to not only personalize music offerings but also to help you discover music through your contacts. Reducing search costs for reliable goods and services is an important part of social commerce’s appeal. Music has always had a subjective dimension where choices are factored in part based on preferences of others. Artists also often operate as currency paying the admission price for social acceptance. But how will artists and the music industry monetize music in this new cloud environment? Will they pay for the digital “lockers” to store their purchased music? Will they put up with the advertisements that crashed FM radio? Will they purchase subscriptions to stream personalized music? The are complex questions which will require a careful scrutiny of all the new services that cloud services offer and the dynamics of the music industry.


[1] “Digital Music’s Cloud Revolution”, by Steve Knopper in Rolling Stone. Dec 22-Jan 5, 2012, p.16.




Anthony J. Pennings, PhD has been on the NYU faculty since 2001 teaching digital economics, information systems management, and global communications. © ALL RIGHTS RESERVED


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