What it is: For the first time in history, music streaming has surpassed music downloads.
At one time, people bought music on CDs. If you wanted the latest song or album, you had to go to a music store and buy a music CD. Then Napster arrived along with MP3 audio file formats, and suddenly people realized you could share and download individual songs or entire albums as digital audio files.
In the chaos that followed after Napster’s arrival, Apple offered iTunes as a legitimate source for downloadable music. While the music industry initially balked at the idea of selling music as digital downloads, they couldn’t ignore the pirate sites offering free MP3 files to everyone. Reluctantly, the music industry embraced iTunes and iTunes helped legitimize selling music as audio downloads.
But just as iTunes helped kill music stores, suddenly streaming music threatened iTunes. Apple got caught flat-footed by clinging to the downloadable music business model for so long with iTunes that they completely missed the streaming music business that had suddenly popped up and was slowly threatening the downloadable music business. Instead of cramming multiple MP3 files on a single device, people could just stream music instead.
CDs were just a medium to deliver music and MP3 audio files were just a digital medium to deliver music. Streaming music eliminated the need for either one, which directly threatened iTunes. That’s why Apple acquired Beats Music for $3 billion dollars mostly for Beats’ streaming music service.
Streaming music is the future and downloadable audio files are not, just as downloadable audio files were once the future and music CDs are not. The trend is always to eliminate the medium whether it’s a music CD, a printed book, or a DVD containing a movie. Eliminate the medium and that’s the future.
For the first time, streaming music has surpassed downloadable audio files and the trend will only continue in this direction. People find it easier to stream music than to store a fixed number of songs on a smartphone. The future of iTunes is as a streaming music service.
You can see this same transition happening with software. Instead of buying software stored on a DVD in a box, companies such as Microsoft are offering software as a service such as their Microsoft Office 365 annual subscription service. Now instead of storing Microsoft Office on your hard disk, you can just access Microsoft Office from your browser.
Going fine step further, you don’t even need a large hard disk any more when you can store all your documents in the cloud on a service like iCloud or DropBox. That’s why Chromebooks are so popular because not only are they cheaper, but they can do everything you need without a big hard disk to store everything.
Watch for all types of media to disappear gradually. People will still buy music CDs just as they still download audio files, but that will never be the dominant form any more. Streaming music services are simply pointing the way to the future. Keep eliminating the middleman and that’s the future of tomorrow.