Music A.F. (After Facebook)

by Dick Wingate

As everyone knows by now, Facebook announced at F8 the integration of music and other media services into their live feed. This will have a profound impact on music consumption, but exactly what the long term ramifications are remain to be seen. The only certainty is that a lot more music will be listened to on impulse, as users see their friends listening to a cool playlist, an old song that they haven’t heard in a while or something new that they didn’t even know was released. Additionally, some users will want to impress their friends by experimenting with new music, genres etc.

After a few days of Facebook use with multiple services as well as the new Timeline (you can get that now by setting up a developer account), I am generally impressed with the implementation that Facebook has delivered. It is now clearer to me why there are two feeds and yet I would have done it a bit differently. All of the music listening activity is in the real time feed, along with other media consumption such as video (Vevo) and Netflix (still to come in the US). Right now there is an enormous amount of music listening activity and it makes sense to have it in a separate feed. Unfortunately Facebook has also decided that their algorithm is better at deciding whose status updates, photos etc should be in your main feed (now called “Recent Stories”) and whose are now relegated to the real time live feed along with the music and other media.  Frankly I wish they’d kept them separate.

So what does it all mean for the music industry? It is clearly a huge lift for the visibility of the announced services that are already integrated, from subscription services like Spotify (who have the default playback setting}, Rdio, MOG, Slacker and Rhapsody; to playlist and socialized radio specialist Songza; to the relaunched iHeartRadio; and eventually to music recommendation services like Moodagent and Echonest. Pandora is curiously absent for the moment. However, the financial impact is uncertain. As we move inexorably to a streaming on-demand world (when did we first start discussing this?1996?), will the labels and, ultimately, the artists make enough money from the fractions of pennies per performance to make up for the loss of CD sales and the inevitable decline in download sales from iTunes? Will the services, which now have to offer free on-demand listening just to compete, be able to make a profit on advertising and upgrades to premium accounts? The license costs for free, on-demand listening are significant.

I predict consolidation among some the smaller players, not just for the reason above, but because the way it works on Facebook right now heavily favors the bigger players with installed bases of users and software. There is no interoperability between the services, as many hoped would happen. Therefore when looking at your music feed and seeing friends listening to music on perhaps up to 10 different services, will the casual fan want to install apps and set up accounts with 10 different service providers? Probably not. A casual fan that sees the majority of friends on Spotify may simply be happy to use Spotify and leave the rest. Interoperability would have enabled the user to listen to a song on Spotify that a friend was listening to on Rhapsody. Interoperability is what exploded SMS text messaging. Most people don’t remember that text messages were initially only able to be sent to someone on your mobile network (Blackberry Messenger still operates that way, but it’s OS- and not network-specific). This is no trivial task for music services, as catalogue matching will be required and there are likely significant differences, especially with the independent labels’ repertoire.

No matter what, the elephant in the room is, and always seems to be, Apple. Will Apple launch an all-you-can-eat-subscription service and attempt to move their huge installed base to a streaming model? After all, they have the credit card numbers on file. In Cupertino, they surely debate how such a service would impact sales of iPhones and iPods. We can guess that if they go subscription it will be a closed network and likely won’t be integrated with social networks. Is that the Achilles Heel for Apple? Only time will tell. Their locker service will not have significant impact on digital sales. Amazon and Google’s lockers seem to be stillborn.

It’s been a dramatic week for the music industry, a benchmark in digital music. Apple’s move will be the next one.

Posted by Ted • Monday, September 26, 2011 .