What Happens To Music After Net Neutrality?S

Years ago, I believed experts who said Net Neutrality wasn't a big deal for two reasons. First, It never really existed in the first place (because many ISPs prioritize traffic in some way, say, for or against online gaming). Second, the free market would solve the problem, because ISPs that threw up bad content roadblocks would be abandoned.

The second one is no longer true. There's almost no competition for ISPs. Everyone knows this, but I really know it right now, because I am moving and only have one option for non-satellite internet: the regional cable provider. They can do whatever they want to my connection, because I have nowhere else to go. They never have to answer my phonecalls, and they can degrade my service as much as they want. This is the case almost everywhere these days, even in big cities, due to tremendous concentration in the ISP business over the past 20 years.

As for number one, well, it looks like we're going to find out what happens when ISPs can be more open about doing whatever they want to any kind of traffic, for any reason, because we seem to have decided that the internet isn't a public utility like the phone lines through which some of it runs. To some, this means the internet will be broken. Net Neutrality has been struck down (here's the best explanation we've seen), and if the FCC tries to save it, according to Susan Crawford, the expert cited by Re/Code (she declined to respond to a query for this piece), Republicans have sworn to dismantle the FCC.

So it's looking like the internet might become a lot more like cable television, with only a few main channels dominating, because smaller entities won't be able to pay ISPs to present their content — especially video or real-time applications — the way the big media companies will.

We'll leave the rest of the philosophical, political, and economic implications of this to the rest of the internet, because people are talking about this everywhere, and focus instead on the music implications. So, what would an open, sanctioned lack of Net Neutrality do to the music apps and services that consumers seem to love, and which are only just getting started in terms of penetrating the mainstream? Here are some possibilities, implications, and observations:

ISPs Would Get Paid Before Artists

For a while there, it seemed like ISP and wireless carrier partnerships could bring (a little bit) more money into the music ecosystem, because music services can make it less desirable to switch one's ISP or wireless service. If switching means changing or paying a different amount for your music service (or even losing your online collection), you're going to stay, and that's worth something to access providers. This is called "stickiness," in internet jargon.

In a post-Net Neutrality world, the money would flow the other way — music services could have to pay every major ISP to avoid having their service terminated or degraded (for example through bitrate/sound quality), with negative ramifications for music fans, artists, services, labels, publishers, songwriters, and the rest of the music ecosystem.

Services That Don't Pay ISPs Could Lose Sound Quality

For big music services, all of which are hoping to multiple their usage massively over the next decade, the end of Net Neutrality would mean striking deals with ISPs if they want to reach consumers, the same way television networks must do with cable companies.

But unlike with cable, this isn't just about access; it's about sound quality too. On-demand music, video, and radio service require lots of bandwidth, especially if people stream music all day long. It's such a big expense, even without having to pay ISPs, that Spotify structured its architecture such that its desktop subscribers use their upstream connections to defray Spotify's overall bandwidth costs. And the more bandwidth is available, to a point anyway, the better music sounds (and the better video looks, for that matter).

If one music service sounds good (because they pay your ISP to be able to stream at a higher rate), and another does not (because they don't), it'll have a big impact on your decision.

Services That Do Pay ISPs Could Go Out of Business

Margins are already thin at many digital music services, as the general population continues its shift towards music streaming services.

"Of course, in general, any additional fees [like those paid to ISPs to deliver a music service] would likely prevent many music services from being able to continue operations, given the very thin margins," said 8tracks founder David Porter. "As I always point out, in most consumer-facing internet businesses, you've revenues (typically advertising, maybe commerce, and occasionally subscription) and people costs. The rest is relatively inconsequential. With music, you have this other cost — royalties — that's more expensive than people costs. Digital music should be paying royalties, without a doubt, but it does make the economics challenging and any additional fees probably not viable."

This Already Sort of Happened in Australia

In the United States, we've largely enjoyed unmetered, or relatively unmetered, internet access. It might not be as fast as what they have in Europe or Japan, but at least we mostly haven't had to worry about racking up huge bandwidth costs when we stream music.

In some other countries, internet bandwidth has been metered, just like cellphone data is in more countries. MOG launched a campaign with the ISP and wireless provider Telstra in Australia, allowing its subscribers to stream from MOG without incurring any bandwidth charges. As a result, MOG became massively popular there, relative to other places. This is a pretty good model for what will happen if music services and ISPs partner up to decide who can listen to what: the data provider will be able to pick the content winner.

See Also: Beats Music and AT&T, etc.

Beats Music declined to clarify its relationship with AT&T for this article, and really, it's not a Net Neutrality issue, because there is no notion of Net Neutrality for cellular wireless anyway. As such, music services and wireless providers make natural bedfellows, and could provide another preview of what music looks like after Net Neutrality.

Beats Music hasn't even launched yet, and already it has a deal that lets AT&T subscribers get Beats Music for up to five family members for a flat rate of $15 per month. According to AT&T's website, those streams "Downloading & streaming over the wireless network may use excess data & incur large data charges," but that could change. In a post-Net Neutrality world, deals like that would start popping up everywhere, and for ISPs, not just wireless services.

Even better, from the perspective of telcos, they could offer a "super-bundle" offering internet access, wireless access, television access, and music in the form of discounted or better-sounding music service, or even one that reliably plays at all. That sounds pretty "sticky."

Offline Playback Is Your Friend

Microsoft's Xbox Music service just added it to its Android and iOS apps. Rhapsody added it two SXSWs ago, and most of the other services have it too. Offline playback is the ability to cache normally-streamed music on a device, so that it can play in the absence of an internet connection or an agreement with a certain ISP. If we're really done with Net Neutrality, offline playback could become one of the most important features not just on your phone, but on your computer too.

For what it's worth, we reached out to several on-demand and internet radio services for this story and only one has responded so far (David Porter of 8tracks, above). A spokesperson for another music service did say, "We are staying out of this discussion for now" [our emphasis].


Image: Cardaf

What Happens To Music After Net Neutrality?

Evolver.fm observes, tracks and analyzes the music apps scene, with the belief that it's crucial to how humans experience music, and how that experience is evolving.