The End of the 80 gig Hard Drive?

It’s starting to seem obvious that Napster and eMusic, iTunes and Bit.Torrent have all been part of a transitional period. An interstitial era between the time when buying music meant buying physical media, and when we ultimately begin consuming most of our music from the Web. We will look back on this period and wonder at our barbaric obsession with MP3 players, CD burners, and mp3 downloads. What is going to replace replacing them?

Streaming music.

As widespread, hyperspeed broadband becomes cheaper and storage costs approach zero, we’re going to see an explosion in Web sites offering streaming access to music. So far, this has been the story of the music industry gradually finding its footing in the digital age. Or, as the New York Times put it, “Music Industry Lures ‘Casual’ Pirates to Legal Sites”:

Record company executives say there are three kinds of music fans. There are those who buy music, and those who get a kick out of never paying for it. And then there are those whom Rob Wells at Universal Music Group calls “dinner party pirates”: the vast majority of listeners, those who copy music illegally because it is more convenient than buying it.

If those low-level copyright cheats could be converted to using legal music services, the digital music business would get much-needed help. Yet even industry executives acknowledge that until recently, they were not giving those listeners many ways to do what they wanted: to sample new music and to play it back anytime, at little or no cost.

Over the past year, however, as sales of CDs have continued to fall and paid-for downloads from services like Apple’s iTunes have fallen short of hopes, record companies have moved to embrace casual file-sharers. Legal services offering free, unlimited streaming of music, rather than downloads, are proliferating. According to a survey published last week, they are taking some of the wind out of the pirates’ sails.

But this isn’t really about the music industry and its come-to-Jesus moment. Nor is it about the fickle morality of “casual” pirates. It’s about the natural convergence of listeners and technology. A critical mass of consumers already have tiny, handheld devices that can access high quality music streams wherever cell phone service is available. Mobile applications by Last.fm and Pandora are among the most popular iPhone downloads. Even my Dad is starting to listen to streaming music on his iPhone.  It’s not a surprise that people love typing in the name of an artist and listening to what they want to hear.

This experience is evolving. Last.fm and Pandora don’t really allow users to select the tracks they want to hear; they’re music discovery engines. They’re designed to sell you new music through Amazon and iTunes. But people are going to want more. They’ll want access to all their music, when they want to hear it.  They’re going to want sites that offer them integrated iTunes-like functionality over the Web. A new service called Spotify, which Slate recently called the the world’s greatest music service, is pretty much already there.

It won’t be available in the US until later this year, but European users can download the software and play 8 million songs for free (it’s £9.99 per month if you want to avoid ads). They can create and share playlists, and even subscribe to playlists created by their friends. Yes, it’s a program that has to be installed like iTunes, but the music isn’t on your PC, it’s in the cloud. Unlike Lala, which offers a similar, web-based experience, there’s no limit to the number of times you can listen to a song for free.

There’s some indication that the kids approve:

They are the record companies’ bogeyman: the 15-year-old in their bedroom ripping off a star’s latest album and sharing it with their friends has been blamed for bringing an industry to its knees.

But new research shows that the number of teenagers illegally sharing music has fallen dramatically in the past year.

The survey of 1,000 fans also shows that many14 to 18 year olds are now streaming music regularly online using services such as YouTube and Spotify.

At the same time less than a third of teenagers are now illegally downloading music, the survey suggests. In January this year 26% of 14 to 18 year olds admitted filesharing at least once a month compared with 42% in December 2007.

The research revealed that many teenagers (65%) are streaming music regularly, with more 14 to 18 year olds (31%) listening to streamed music on their computer every day compared with music fans overall (18%).

The picture may be more complex than a simple shift from filesharing to streaming, with people sharing music in new ways such as via bluetooth technology, on blogs, and through copying, also known as ripping content from friends’ MP3 devices.

Even though users of streaming services are not necessarily buying more music, the industry benefits by learning more about fans’ tastes. Steve Purdham, CEO and founder of We7, a music streaming service and download store, said: "They may not buy an album, though they have that opportunity, but you can sell them tour tickets and a T-shirt of their favourite band."

Of course there were some problems with the survey (to begin with, it’s a survey). But I think the trend is real for one simple reason. It’s much easier and faster to search for the record you wanted to hear and play it, than it is to scour the torrent sites and download it illegally. Plus, you don’t have to worry about viruses or poor quality files.

For now, there’s an obvious limitation to services that offer you an iTunes-like experience on the desktop. How do you get those tunes in your car or on your iPod? This is where the record companies have a chance to make some money. Very soon, we’ll all be living in a world where having a hard-drive on your desktop or in your pocket won’t be necessary. The new Radiohead record will come out, and you’ll type “Radiohead” into your computer / phone / car stereo. Maybe you’ll see ads. Maybe you’ll pay $4.99 or $6.99 for everywhere access.

But you’ll be listening to music that’s digitally stored somewhere else. And it will be the music you actually wanted to hear. And you will never have to worry about a hard drive crash.

I’m not suggesting we won’t still have to resort to brute purchasing, especially if what you something that is rare or unavailable through licensed services. And I actually think a counter cyclical interest in vinyl records will continue to surge upward, as people get nostalgic for music artifacts they can collect. But even people who like their music on 180-gram platters realize they can’t take it everywhere. For that, they’ll have to sign up. And they will. How can I be so sure?

Microsoft is about to launch a service that will be substantially similar to Spotify. That means the new landscape is not only a foregone conclusion, but that Microsoft, as usual, is arriving late to the party.