This article is part of our special report ICT: Fuelling the economy.
Cloud computing is paving the way to access music online legally, boosting new revenues for major and independent labels alike. But in Europe, national licencing systems may pose a hurdle to the development of cloud music, experts say.
Cloud music is quickly becoming a market reality because of the added value that it brings in terms of music portability. Users who subscribe to one of the available services can listen to music stored in remote servers regardless of the devices they use.
Listening to music is gradually shifting from a devise-based system (for instance with iPods) to an access-based approach, where what matters is the subscription to so-called digital music lockers, huge libraries stored in the cloud.
The industry welcomes these new developments, as record companies expect a traffic increase on their digital boutiques if customers turn to use the cloud to store or access their music.
“The market is showing that consumers are willing to pay for the portability of music,” said Charles Caldas, chief executive of Amsterdam-based Merlin, which represents independent record labels.
Access rather than ownership
Music access is becoming an important alternative to music ownership, as many users now combine listening to high-quality streamed music with actual downloading it.
“The fact that these two models of consumption co-exist speaks volume about the future,” said Rob Wells, president of the global digital business of the Universal record label.
“We have really only scratched the surface of digital music in the last decade. Now we are starting the real mining, and on a global scale,” he added.
Many in the industry are thinking that increasing the use of cloud services is a win-win situation for the music industry – major and independent labels alike.
Data support this view. Between 2009 and 2010 sales of music in the cloud services grew by 4.6%. At the same time the digital music industry increased its global sales by 5.3%.
Moreover, cloud music operates through licenced services which make available only copyrighted music, and therefore offers an incentive not to use pirated material.
The main actors
In 2008, a Swedish start-up launched Spotify, which offers access to copyrighted music to its subscribers.
The service is available for free, but for a monthly subscription costing as little as €5 for its cheapest packages Spotify allows unlimited streaming of music and no advertisement. It is a sort of upgraded YouTube where users pay a little fee to have access to higher-quality content, to dispose of content not available elsewhere, and to avoid security problems.
For a €10 fee Spotify also allows its subscribers to directly download music from the cloud to mobile telephones.
Last November Apple's iTunes, the digital music market leader, launched in the United States iTunes Match service, which is now slowly making its way in Europe. It offers download of copyrighted content from the cloud to its subscribers.
Other services followed, such as Google Music, which is currently only available in a few countries and not in the EU.
“We have only launched Google Music in the US at the moment and we have nothing to announce about any other countries at the moment – although we are very interested in expanding the service,” a Google official told EURACTIV.
Legal hurdles for portable music
Despite being praised for giving its users a higher portability of music content, in Europe cloud services face a serious hurdle to turn this pledge into reality.
Spotify, the main actor in Europe, is not present in all EU countries. “I have a subscription in Belgium, but I cannot access my collection when I am in Greece, because Spotify is not operational there,” said Kostas Rossoglou, legal officer at BEUC, a consumers’ organisation.
But even if a service were available in all 27 countries, subscribers might find themselves unable to access their entire collections. It always depends on licences, which remain a national matter. The same song can be licenced in Germany but not in France, making it impossible for a user to access it once the border is crossed.
A pan-European licencing system would be the solution, but it remains a mirage as collective societies fight for national privileges, raising invisible but very tangible barriers in the theoretically border-less EU internal market.