Triumph in the "Cloud"-light up the future of online music

Cloud computing in the online music industry

The online music has been popular for years. People get used to listen to music online. Some of them prefer downloading and removing music to remote devices such as USB, Mp3 so that they can enjoy the music in cars or places without internet connections. However, copyrights issues increased, which take time and capital to solve the problems.

Mp3.com who was known from on-line music provider, had encountered lawsuit in early years due to the copyright infringement. Besides, people found that after downloading music in one place such as in offices, they couldn’t listen to them at home unless stored in storage medium or simply re-downloading. The application of cloud computing technology changes the way of people enjoying music.

Then, what is cloud computing? “Cloud computing definition: Cloud computing is defined as hosted services for storing and delivering personal content over the Internet. Over the words software or your content that would normally be posted on your computer is, instead, hosted on a server and accessed by your computer via the Internet. What makes this a new trend is the fact that Amazon, itunes and others are now offering consumers the option to store their music collections in the cloud so they can be accessed from remote locations. Ironically enough, back in 1999, My.Mp3.com was an earlier player in the cloud game, offering consumers the option to store their music ‘in the cloud’. They were sued by the record labels and dropped the idea.”

How does cloud computing work for online music?

In brief, the cloud computing service store users’ music remotely. The users upload their own music to the cloud and the cloud acts like an external hard drive. Then users can access the music through a special interface.

It starts awkward stage of the online music revolution, which provides customers with a legal way to music online and soon be adopted by many companies because it makes portability possible, enabling registered users to access digital music saved in remote servers regardless of different devices. Crucially, users are no longer required to continually store every file on a local hard drive

Introduction and development of music industry

The popularity and emergence of internet, personal computers enabled digital music to flourish. It brought three big revolution towards the traditional music industry.

a. The appearance of resources sharing website Napster brought the first revolution. It allowed people to download whatever music they like online. It is a catastrophe for musicians and records companies. It started to decline after 1997 when the revenue reached a peak of 27 trillion US dollar.

b. Secondly, the announcement of Apple iTunes Store and its Ipod brought people back to the era of paid music.

c. Thirdly, people’s buying behaviors have changed to subscription based on month or year instead of single album or music. Within the period of subscription, people can access to unlimited songs, albums and musical services.

The global digital revenues continue to increase during last years. However, with the seemingly positive numbers, someone paid their attention on the negative aspects.

They argue the online music industry is a mess. The war between music labels and online services is a little bloody. When online music as a new stuff rises up, it captures audiences but then has the same cost-centric problems: negotiating terms with right holders. Concluded from the industry, from 2010 to 2011, several online music providers had some rate of loss. For example, Spotify grew revenues 140 percent to $236 million with a paid-subscription. However, in 2010, Spotify lost $57 million, which was an increase from 2009’s $42 million in losses. There are essentially two business models for online music right now: advertising - a losing model with scale, or subscription, the latter one which has more viability in long term. The cloud computing technology is using subscription service, which charges users to subscribe music categories. 

Trends and forecasts based on the development of online music

a. Streaming service and subscription model replace downloading

b. Cloud replace hard drives and devices

c. Single songs rather than mainly album

d. Production replace consumption

e. High fidelity without limitation of music file size

f. Recommendations and intelligent optimization of searches

g. Retro of the old with new meaning

In the future, we may see the blueprint of music with unlimited selection of high-fidelity music, streaming high-speed wireless connections to portable devices, and when we look back to see the past, if we’d like to retake the old things for new meanings.

Cloud computing influences the music consumption

With the cloud computing, the structure of music consumption has greatly changed during these years.

According to 2014 NIELSEN Music U.S. Report, compared with 2013, although the Digital Albums decreased by 9.4%, and CD Albums decreased by 14.9%, the total digital music consumption has increased by 3.7%. The On-Demand Music Streams has increased by 54.5%. This indicates that Cloud Computing has great impact on online music industry and can earn more profit than the traditional technology.

Although the streaming music impacts on the sales, this new form of music consumption fulfill customers needs for cheap music. The industry can benefit from the potential streaming offers.

Influence of organizational and contextual factors to the cloud music strategic approaches

Cloud Computing VS Traditional Technology

Assuming a very possible scenario that your MP3 player or IPod or laptop crashes suddenly and you cannot get back files that are stored in it and all are lost in the blink of an eye. What about the larger amount of MP3 music files in your devices? Some are converted from discs, some are only available in particular digital format in particular device. Also, if your CD player breaks down, CDs could not play for you without the supporter. These are really disasters for music lovers.

The key words for traditional technology are: download and transfer. People download music through internet and save in one device, then transfer the same music to different devices such as USB, MP3 or mobile phone. For example, if you download music and save in your office computer, you have to transfer all the music to your USB or MP3 if you want to listen when you are home. If your copy lost, you have to download again.

Current problems in traditional technology in online music industry

Functionality

MP3 music file technology brings the revolutionary change in the development of music industry. However, it faces significant problems for music listeners to access the music now. When saving in the computer, music files would dominate the memories of electronic devices, which would weaken the devices’ functionality.

Hardware device

As mentioned in the beginning of this part, the crashes of the device or the entry of computer virus will damage the music files and lost in a flash

Portability

Since any given technology has to be combined with other technologies for commercial outcomes, with the fast upgrade of electronic equipment, music fans continuously find diverse devices for listening music, PCs, MP3 players, smart phones, iPad, iPod and video game consoles are all compatible with music files. Music files have to transfer from a computer to an electronic device if users do not want to take the computer which is cumbersome and time consuming,

Clouding computing emerges at the right moment as a solution for data loss and some key problems in digital music industry like small storage capacity or files transferring among different devices.

Spectrum of opportunities and pitfalls in the adoption of new and emerging technologies

As people are able to obtain unlimited amount of data through the internet, the traditional way of doing business in the music industry was put in danger.

The most important thing for companies that operates in the music business should realize that digital music should be treated as an opportunity, rather than threat. No matter the artists, record company, or cloud computing service provider, should try to incorporate and take advantage of the new technology but not only focusing on its restrictions. What companies could do is: managing and monetizing the accessibility of the music service, rather than its availability.

New management framework of cloud music for managers

Historically speaking, the emerging of new or incremental methods for listening to music has made it difficult for fans to accept and access their music collections efficiently like records, cassette tapes, and compact discs in the past. The emergence of cloud music brings changes in producing and customer consuming attitudes, and respectively - business management.

Type of Innovation

		Type of Innovation
		Product innovation	Process innovation
Intensity of innovation	incremental	Double sided discs	Stereo recordings
	radical	Vinyl disc	Electrical recordings Cloud-based music

Technological Innovations and Intensity of Innovation

The process innovation of cloud music is regarded as radical technology innovation in managing the existing online music market. In this case, the companies’ strategy is to seek to address changes in customer behavior. When customers have better access to more new options, and are willing to change their current situation more quickly. With this dynamic, expect some increase in activity for innovations.

Amazon Cloud Drive and Cloud Player

"Business Innovation is About New Value, Not New Things."- Quote from week 5 readings, The 12 different ways for company to innovate.

Amazon launched its music cloud service –Amazon Cloud Drive– in the U.S. in 2011. Cloud Drive enables customers to upload and store digital contents like music, videos, and photos on Amazon’s servers, which can be accessed by a web browser. The stored music can then be played by the ‘Amazon Cloud Player’. 

Factors drive technology leaders to manage new science-based technologies differently than more traditional, less radical innovations

Compared with cloud computing, there were two traditional ways of management in the development of music industry. One is the mass production and distribution of physical goods, mainly CDs, which is distributed through stores, clubs, e-commerce, or artist concert, etc. Another one is “pay-per-download” model of digital music. Internet has been made affordable for people anytime and anywhere, music lovers’ consumption behavior has changed

Customer needs: Different from traditional downloading music, the technology of cloud computing allows customers access their music files at any time from different electronic devices. Through cloud, customers could upload and stream online music freely. Moreover, if the customer wants to or has to change the electronic device, his/her personal music files could be recovered efficiently. In addition, the increasing consuming of music need virtual storage spaces. The cloud computing service can fulfill the needs.

IT support: Now the application of cloud computing service is widely used, the technology is compatible with multiple software and devices. For example: the Amazon Cloud Player. “In order to upload the music, users need to use the Amazon Music Importer application. This works in conjunction with the embedded Amazon Cloud Player app in browser. It is compatible with iTunes, Windows Media Player, and can also find music in folders on users’ computer's hard drive. As well as being able to stream the music to a computer running Windows or Mac OS X, there are several devices that are compatible with Amazon Cloud Player. This includes: Android devices, Kindle Fire, iOS (iPod Touch / iPhone / iPad), and Sonos wireless Hi-Fi systems.”(Quote: Amazon Cloud Player FAQ: What is the Amazon Cloud Player Service?)

Once the new technology was made, it may lead to the application of new corporate or business strategies.

New Business strategy model-focusing on what’s working and enhance it.

Meeting customers’ need profitably 

Music industry is a customer-centric world, the strategy of application of clouding computing in online music market is to strengthen connection with music lovers.

Successful strategy for cloud music might be:

1. Cooperation with giants of record company

Amazon is authorized by American four major record companies for accessing to mass and superior music library, which is a strong competitive advantage in online music market for providing complete music varieties and highest-quality music files to its users.

2. Combination with new services to create value for customers

Amazon launches Auto Rip services. When customers buy an Auto Rip-eligible CD or vinyl record, Amazon will give free digital copy for listening before the order arrives. Also Amazon put all previous eligible purchases of users into their Music Library, which benefits customers in three aspects:

• Buy any Auto Rip CD or vinyl and enjoy your music before the post arrives

• No need to manually copy your CD or vinyl to the computer

• Get free MP3 versions of all past AutoRip-eligible purchases

3. Focusing on broader users

Amazon Cloud player is not only available for its registered users, but also for others. As is known to the public, Apple, Google, and Amazon are the three biggest cloud music service suppliers. However Amazon launches the mp3 player and mp3 store on IOS devices, which allows the apple users to buy music from Amazon right for their Apple devices. In addition, it also optimizes the setup of Siri browser.

Amazon Cloud player is also available for Android, kindle fire, Roku, Sonos, the strategy of which targets on a greater range of customers.

4.  Strong union with Prime Service

Based on the original prime membership service of free two-day shipping, free movie and TV streaming and free kindle books, Amazon launches the streaming music service-Prime Music, which targeted the thirty million members of Amazon Prime with bundle sales strategy to provide comprehensive service to users.

5.  Cooperation with social medias

Amazon enables users to take advantage of Facebook and Twitter sharing to let friends know about their preferences or tastes of music and find tools like blogs, microblogs, and fan pages for news, which is beneficial for Amazon promote its brand awareness of Cloud Player

Market potential of Cloud Computing

Cloud computing technology opened a new smart era of online music industry, and the cloud music is being the new trend of the industry.

The development of Mobile Internet is changing the world, which also leads to more opportunities and challenges of the music industry. Now in the smart era, with the increasing use of smartphone, the mode of listening music changed a lot, more and more people like to plug in headphones to listen to music online.

Music cloud computing helps to achieve a greater intelligent application of mobile music, the user can play and share music that stored in the cloud through the music software on multiple devices such as mobile phones, computers and TV, without copy from the computer to other terminal devices, and this exerts the interactive features of network to a great extent. (xaclouding.com)

Envisioning uses and applications of Cloud Computing

1. Streaming music is coming!

Streaming music service allow the users to enjoy the music without downloading, cloud sync, more convenient, provides users a better digital music experience.

Although the digital music downloads is shrinking, the IT giants are racing in the acquisition of streaming media. Amazon launched its own streaming music service Prime Music. Apple spent $ 3 billion in acquisition of Beats Headphones and streaming service Beats Music. Google announced a $ 39 million acquisition of streaming music service provider Songza, Yahoo announced the acquisition of RayV. Streaming music users are also becoming more active. (art.china.cn)

As we can see, streaming music service subscription, the "Subscription" part of the figure is in a good development from 6%(2008) to 19%(2013).

In the future, the global network quality will be continuously optimized, more and more content will be produced, competitive will increase, as a result, the music streaming service price for a single user will be lower. So the prospects of streaming music market will depend on whether the amount of subscriber growth can compensate for loss of income that caused by lower prices. (tech2ipo.com)

2. " homemade music " and "contract musicians "

However, just like the video industry chose the " self-made drama " way to reduce the pressure caused by copyright costs, and formed a differentiated pattern on content, maybe " homemade music " and "contract musicians " will be the next step of streaming music service. (pingwest.com)

Strategy Fit Analysis--Developing approaches for exploration and learning about the Cloud Computing

1. Amazon mission ——The guide of Strategy

To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. (amazon.com)

2. Amazon’s expansion into selling “cloud” services--Amazon Web Services

 Amazon Web Services (AWS) provides Amazon’s developer customers with access to in-the-cloud infrastructure services based on Amazon’s own back-end technology platform, which developers can use to enable virtually any type of business. (amazon.com)

Some services Amazon had introduced include four core offerings described as “Infrastructure Web Services”: Elastic Compute Cloud (EC2), Simple Storage Service (S3), Simple DB, and Simple Queue Service (SQS). The move into cloud computing was an unexpected and bold step by Amazon that surprised the application hosting industry. (Campagna, 2011)

Amazon.com beat Google and Apple to punch with its hosted consumer-storage service, Amazon Cloud Drive, and Web-based music-player, Cloud Player.

3. Amazon Cloud Music Player Captures Users with Innovative Features

Amazon Cloud Player was launched in 2011, a cloud-based music player allowing users to purchase music directly from the Amazon MP3 store and access paid music from multiple devices remotely. Users can also upload their own music library to the Cloud Player to access across multiple devices. The Amazon Cloud Music Player delivers a compelling and innovative experience for users of mobile music, which participants feel provides an efficient and useful method to access their music remotely without consuming device storage space. (Dodge, 2011)

4. Amazon Prime Music--Unlimited, ad-free streaming

· Over a million Prime songs

· Hundreds of expert-programmed Prime Playlists.

· No Interruptions

· Unlimited Skips

· Personalized for You

· No Ads

· No playback restrictions

· No additional cost

· Listen Anywhere

· No Internet connection? No problem (amazon.com)

5 . The Acquisition of Amiat

This acquisition will help Amazon construct the layout of cloud strategy, contributing to a better data transfer to Amazon cloud services. (tech.163.com)

6 .The Philosophy Behind Amazon Web Services’ Cloud Strategy

Vogels said this in a blog post which also summed up the AWS cloud philosophy:

The most important concept is that, when you are growing, your cost should grow over the same dimension your revenue is coming in over. For Amazon.com that dimension is number of orders. If orders go up your cost should be allowed to rise as well. Although if you are architected well, you will be able to exploit economies of scale and your cost will rise less than the rise of your revenue. If you are architected correctly for cost-awareness scale becomes your friend. (Williams, 2012)

Strategy Fit Analysis--Latent needs of Amazon


1. Facing new rivals, Amazon expands its cloud-computing offerings

Amazon believes the most cost-effective offering for customers is running programs over its servers. And the company has been investing in ways to connect data centers companies own to AWS’s offerings.

AWS also plans to expand the breadth of its offerings at the conference, announcing a deal with Infor, a provider of business-application software. Infor is developing its run-the-business applications, which are tailored to such industries as automotive, aerospace and hospitality, to be run on AWS.

“It’s a bet-your-cloud strategy on Amazon,” Phillips said. (Greene, 2014)

2. Guarantee the increasing of subscription members

For normal streaming media service providers, they will choose to cooperate with telecommunication operators to sale subscription by the way of bundled discounts mobile phone charges. As for Amazon, its Prime Music makes full use of the 20 million members in Prime system. (pingwest.com)


3. Adjustment of the Prime Music membership fee

The Prime Music users must pay $99 annual membership fee, which is higher than its competitors. Users can also choose other free unlimited music streaming service, which means that the prime music pricing strategy will not appeal to consumers. In order to guarantee the profit of Prime Music, the membership fee may need an adjustment in the future. (re-chord.net)

Strategy Fit Analysis--Anticipating and forecasting “strategic inflections” of Cloud Computing


1. Innovations in Cloud Computing Require Changes in Business Strategy

2. Will Amazon start its own record company?

With providing the streaming music service, Amazon may choose to directly involve in music publishing and distribution services, that is, to be a record company.

3. To be a one-stop multimedia company?

Amazon is trying to become a one-stop multimedia company by making use of the cloud storage and cloud player. The company is also trying to figure out which media space suit them best.


4. Strategy adjustment to keep up with the Cloud Computing Trends

· Cloud-analyzes will be ubiquitous

· Cloud will enable "Self Service Analytics"

· Cloud makes things "smarter"

· Cloud analyzes will improve life in the city

· Cloud will enable industrial Internet of Things

· Cloud will enable video analysis

· Cloud will enable health analysis

· Cloud will enable safe analysis ( 36dsj.com)

Conclusion

Based the analyze all above, it has been clearly shown that Cloud Computing has the big potential and is perceived as the future of digital music. The digital music sales declined, streaming music has become the main trend. Amazon, Apple and Google all participated in the competition of stream music. Based on the Prime Music, Amazon still need to keep innovative and implement more competitive strategies to find a long-term and successful cloud computing develop road as a leading role in the online music industry.

Reference:

1. Alex Williams (2012). The Philosophy behind Amazon Web Services’ Cloud Strategy.

2. Caitlin M. Seale, Aaarrrggg I'm a Pirate: Cloud-Streaming Services and Their Effects on Music Consumption and Music Piracy;

3. Christopher Dodge (2011).Amazon Cloud Music Player Captures Users with Innovative Features.

4. Chris Velazco(2014) What you need to know about Amazon Prime Music

5. Don Sears (2012), Why the online music industry is a mess;

6. Eliot Van Buskirk (2012), How the Business of Streaming Music will Change Culture...For the Better;

7. Hane, Paula J. (2011), Clouds in the forcast, Information Today, Vol 28, Issue 8

8. Jay Greene (2014).Facing new rivals, Amazon expands its cloud-computing offerings.

9. Jeremy Wade Morris (2011), Sounds in the cloud: Cloud computing and the digital music commodity;

10. Jillian D'Onfro (2014).Here's A Reminder Just How Massive Amazon's Web Services Business Is.

11. Jon Fingas (2013).Strategy Analytics: iCloud, Dropbox and Amazon top cloud media in the US.

12. Laura French (2015) Audio streaming service rock the music industry

13. Matt Rosoff (2009) 10 music-tech trends that will shape the next decade

14. Peter Tshmuck (2012), Creativity and innovation in the music industry, second edition

15. Scott Campagna (2011).Amazon Web Services: business model or strategy.

16. Stephanie Crawford, How the Amazon Cloud Player Works

17. Zanev, A.S.. (2011). Cloud Computing - Marketing Strategy for the Music Industry. Economics.

Websites

http://www.amazon.com/Careers-Homepage/b?ie=UTF8&node=239364011

http://www.pingwest.com/streaming-music/

http://tech2ipo.com/63902

http://art.china.cn/music/2014-12/19/content_7454112.htm

http://www.xaclouding.com/2013/hysd_0513/715.html

http://www.amazon.com/gp/feature.html?docId=1002557791

http://tech.163.com/15/0413/09/AN2PGGNC000915BF.html

http://www.knowledgeatwharton.com.cn/article/2765/

http://www.36dsj.com/archives/23662

http://www.re-chord.net/mind/2109

http://www.seattletimes.com/business/facing-new-rivals-amazon-expands-its-cloud-computing-offerings/

http://techcrunch.com/2012/12/02/the-philosophy-behind-amazon-web-services-cloud-strategy/