Cloud-based Music Streaming Will Be Dominant by 2016 (Study)

Shift due to growing use of mobile devices for listening.

By 2016, cloud-based streaming services will become a more important form of access to music than owning albums, songs or tracks, forecasts ABI Research.

"The number of subscribers to mobile music streaming services is expected to approach 5.9 million by the end of this year," analyst Aapo Markkanen said. "ABI Research believes that number will exceed 161 million subscribers in 2016, meaning a compound annual growth rate of nearly 95%."

ABI Research attributes this shift primarily to the growing use of mobile handsets, especially smart phones, as listening devices.

The study suggests that the service providers that enable these new models, such as Rhapsody, Melon and Spotify, will be among the biggest winners from these developments.

"Record labels, producers and other middlemen whose businesses have been shaken by content piracy also stand to gain from streaming services as they have an opportunity to monetize a lot of consumption that would otherwise take place outside their revenue base," ABI Research predicts.

The study also suggests that retail prices for music-in-the-cloud are expected to decline, but that's not certain, practice director Neil Strother said.

"Forecasts of declining prices are based on the assumption that the rightsholders will lower their royalty demands," he said. "Record labels and collecting societies should not overplay their hands when it comes to royalty issues. If consumers do not have convenient and affordable legal alternatives, they will simply enjoy their music by other means."