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Jesse Brown: Why music streaming services mean the death of radio—or perhaps its rebirth

Jesse Brown: Technology

Video never did kill the radio star. Neither did CDs or MP3s or even satellite radio, which tried to take down dusty old AM/FM radio by offering a cable TV–like galaxy of choices. iPods were a big contender: with our entire music collections in our palms, who needed a DJ to play the same tunes (and a bunch of annoying ads) over and over? Apparently, we did. Picking songs from an infinite library became a chore, and iPod fatigue set in. Digital music sales were supposed to double, then triple, as hundreds of millions of people bought music-capable smart phones and tablets. That hasn’t happened.

Now that wireless networks are fast enough to deliver high-quality music to our smart phones, radio faces a new threat—streaming. Music streaming services are similar to radio in many ways. Songs are programmed for listeners and flow endlessly through our headphones and speakers. Some listeners stream music through their computers via the web, but most connect through apps installed on phones and tablets. Last year, streaming was the fastest-growing music medium in the world, and Canadians love it.

Before 2012, there were no decent streaming services in Canada, due to regulatory red tape and our bizarrely complicated licensing system. There are four different royalty collection agencies in Canada, all vying for a cut whenever a song is played. Their rules are set by three regulatory bodies—slow-moving bureaucracies struggling to apply analog concepts to a digital world. Should streaming music be classified as an “interactive” medium, like a CD? Or as a passive medium, like radio? If your streaming app lets you skip to the next song, does that make it “music on demand,” like a jukebox, and should there be a pay per use? These questions are weird, like trying to figure out if the hubcaps on a Model T Ford should be taxed as horseshoes or as wagon wheels, but until they’re answered, nobody will know exactly what it costs to operate a music streaming service in Canada. Pandora, a wildly popular U.S. streaming service, refused to enter Canada—its CEO called our system “obstructionist.”

A few players have managed to navigate the quagmire and launch, hoping to push regulators to catch up to the technology. They’ve found instant popularity. Recent data suggests that at least 10 per cent of Canadians already stream music.

The appeal is in its radio-like simplicity. Commercial radio has been around for nearly 100 years—and outlived its various challengers—because it’s dead easy. You get in your car and turn it on. And most of us rarely stray from a few pre-set stations. Born with a beautifully simple user interface, radio is, and has always been, a killer app.

CBC is one of the players investing heavily in streaming. It launched CBC Music last February, amid massive budget cuts that forced the broadcaster to slash jobs and cancel shows on Radio One. The streaming service costs about $6 million a year to run, and Chris Boyce, the executive director of radio and audio, took plenty of heat for fun­ding the project. But the complaints weren’t quite fair. Blaming the CBC for investing in streaming is like blaming newspapers for investing in the web even as they cut print jobs. “You need to be where the audience is,” Boyce says. Or perhaps where they’re going.

Streaming services offer features that radio listeners long for. You can skip songs you hate, pause or instantly purchase songs you love. There’s technology that studies your musical choices and adapts to your taste. Streaming can also respond to your moods and activities, playing lyric-free music while you work, energetic music while you exercise and family-friendly music when you’re with your kids. These great features are currently available to Canadians, though no single app offers them all—yet.

CBC Music, for example, focuses on curation and variety—it has over 50 different genres streaming around the clock, at the push of a button (including 10 classical stations, in an overkill effort to appease listeners still angry that CBC Radio Two shifted formats from classical to “eclectic”). The service is free and supported by ad revenues. When you’re listening to CBC Music, you can’t skip or pause tracks—not because this feature is technically difficult to add, but because it would threaten CBC Music’s status as a “non-interactive” service. Once again, in Canada, it’s about regulation, not innovation.

CBC Music appeases regulators by deliberately resembling radio. It may lack many of the features of slicker U.S. sites, but for a while it was virtually the only game in town. The rush to market paid off—since its launch, CBC Music has had over nine million web visits and more than 300,000 app downloads. Competition soon followed.

The New York–based start-up Songza came to Canada last summer, sporting a simple interface, skippable, pausable tracks and a sophisticated method of music selection that its CEO, 29-year-old Elias Roman, describes as “manual curation with algorithmic optimization.” In English: Songza hires people with good taste to make playlists, and then uses computer code to study each listener’s behaviour and personalize selections to the finest detail. “If you’re looking at pictures of your ex,” Roman tells me, “we can figure that out and build a playlist for it.” Creepy, but it’s working—Songza hit one million mobile app downloads in its first 70 days in Canada.

And yet, like all free music streaming services, Songza is a money loser. In the nascent world of music streaming, success equals loss. The more popular a free service is, the more royalty and bandwidth costs it incurs, and ad revenues aren’t high enough to cover them. Despite its popu­larity, CBC Music generated a return of just $750,000 in advertising in its first year.

Streaming services are happy to bleed money today in order to dominate the market tomorrow. Like Twitter or Facebook in their early days, they’re not concerned about profitability. Their immediate goal is to become essential in the lives of listeners. For millions of music lovers around the world, they’ve
already succeeded.


The best music streaming services

SONGZA
Songza
Free, with no audio ads; easy interface; great curation; ability to skip songs a huge plus
CBC Music
CBC Music
Free, with audio ads; perfect for Canadian music lovers; limited international library
Rdio
Rdio
Web and mobile subscription $9.99 a month; huge library;
curated streaming
Grooveshark
Grooveshark
Like Rdio, but without the monthly fee
Slacker Radio
Slacker Radio
Free or premium services (from $3.99 a month); deep music library;
talk radio
 

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