These advances in computer networking, combined with powerful home computers and modern operating systems, made streaming media practical and affordable for ordinary citizens. Stand-alone Internet radio devices emerged to offer listeners a no-computer option for listening to audio streams. These audio streaming services have become increasingly popular over recent years, as streaming music hit a record of 118.1 billion streams in 2013. In general, multimedia content has a large volume, so media storage and transmission costs are still significant. To offset this somewhat, media are generally compressed for both storage and streaming. Increasing consumer demand for streaming of high definition (HD) content has led the industry to develop a number of technologies such as WirelessHD or ITU-T G.hn, which are optimized for streaming HD content without forcing the user to install new networking cables. In 1996, digital pioneer Marc Scarpa produced the first large-scale, online, live broadcast in history, the Adam Yauch-led Tibetan Freedom Concert, an event that would define the format of social change broadcasts. Scarpa continued to pioneer in the streaming media world with projects such as Woodstock '99, Townhall with President Clinton, and more recently Covered CA's campaign "Tell a Friend Get Covered" which was live streamed on YouTube.
—Robert Christgau, 2018
A media stream can be streamed either "live" or "on demand". Live streams are generally provided by a means called "true streaming". True streaming sends the information straight to the computer or device without saving the file to a hard disk. On-demand streaming is provided by a means called progressive streaming or progressive download. Progressive streaming saves the file to a hard disk and then is played from that location. On-demand streams are often saved to hard disks and servers for extended amounts of time; while the live streams are only available at one time only (e.g., during the football game). Streaming media is increasingly being coupled with use of social media. For example, sites such as YouTube encourage social interaction in webcasts through features such as live chat, online surveys, user posting of comments online and more. Furthermore, streaming media is increasingly being used for social business and e-learning. Due to the popularity of the streaming medias, many developers have introduced free HD movie streaming apps for the people who use smaller devices such as tablets and smartphones for everyday purposes.
The Horowitz Research State of Pay TV, OTT and SVOD 2017 report said that 70 percent of those viewing content did so through a streaming service, and that 40 percent of TV viewing was done this way, twice the number from five years earlier. Millennials, the report said, streamed 60 percent of content.
Transition from a DVD based to streaming based viewing culture
One of the movie streaming industry's largest impacts was on the DVD industry, which effectively met its demise with the mass popularization of online content. The rise of media streaming caused the downfall of many DVD rental companies such as Blockbuster. In July 2015, The New York Times published an article about Netflix's DVD services. It stated that Netflix was continuing their DVD services with 5.3 million subscribers, which was a significant drop from the previous year. On the other hand, their streaming services had 65 million members.
The roots of music streaming: Napster
Music streaming is one of the most popular ways in which consumers interact with streaming media. In the age of digitization, the private consumption of music transformed into a public good largely due to one player in the market: Napster.
Napster, a peer-to-peer (P2P) file sharing network where users could upload and download MP3 files freely, broke all music industry conventions when it launched in early 1999 out of Hull, Massachusetts. The platform was developed by Shawn and John Fanning as well as Sean Parker. In an interview from 2009, Shawn Fanning explained that Napster "was something that came to me as a result of seeing a sort of an unmet need and the passion people had for being able to find all this music, particularly a lot of the obscure stuff which wouldn't be something you go to a record store and purchase, so it felt like a problem worth solving."
Not only did this development disrupt the music industry by making songs that previously required payment to acquire freely accessible to any Napster user, it demonstrated the power of P2P networks in turning any digital file into a public, shareable good. For the brief period of time that Napster existed, mp3 files fundamentally changed as a type of good. Songs were no longer financially excludable – barring access to a computer with internet access – and they were not rival, meaning if one person downloaded a song it did not diminish another user from doing the same. Napster, like most other providers of public goods, faced the problem of free riding. Every user benefits when an individual uploads an mp3 file, but there is no requirement or mechanism that forces all users to share their music. Thus, Napster users were incentivized to let others upload music without sharing any of their own files.
This structure revolutionized the consumer's perception of ownership over digital goods – it made music freely replicable. Napster quickly garnered millions of users, growing faster than any other business in history. At the peak of its existence, Napster boasted about 80 million users globally. The site gained so much traffic that many college campuses had to block access to Napster because it created network congestion from so many students sharing music files.
The advent of Napster sparked the creation of numerous other P2P sites including LimeWire (2000), BitTorrent (2001), and the Pirate Bay (2003). The reign of P2P networks was short lived. The first to fall was Napster in 2001. Numerous lawsuits were filed against Napster by various record labels, all of which were subsidiaries of Universal Music Group, Sony Music Entertainment, Warner Music Group, or EMI. In addition to this, the Recording Industry Association of America (RIAA) also filed a lawsuit against Napster on the grounds of unauthorized distribution of copyrighted material, which ultimately led Napster to shutting down in 2001. In an interview with Gary Stiffelman, who represents Eminem, Aerosmith, and TLC, he explained why Napster was a problem for record labels: loss in revenue. In an interview with the New York Times, Stiffelman said, "I’m not an opponent of artists’ music being included in these services, I'm just an opponent of their revenue not being shared."
The fight for intellectual property rights: A&M Records, Inc. v. Napster, Inc.
The lawsuit A&M Records, Inc. v. Napster, Inc. fundamentally changed the way consumers interact with music streaming. It was argued on 2 October 2000 and was decided on 12 February 2001. The Court of Appeals for the Ninth Circuit ruled that a P2P file sharing service could be held liable for contributory and vicarious infringement of copyright, serving as a landmark decision for Intellectual property law.
The first issue that the Court addressed was "fair use," which says that otherwise infringing activities are permissible so long as it is for purposes "such as criticism, comment, news reporting, teaching scholarship, or research."[38] Judge Beezer, the Judge for this case, noted that Napster claimed that its services fit "three specific alleged fair uses: sampling, where users make temporary copies of a work before purchasing; space-shifting, where users access a sound recording through the Napster system that they already own in audio CD format; and permissive distribution of recordings by both new and established artists."[38] Judge Beezer found that Napster did not fit these criteria, instead enabling their users to repeatedly copy music, which would affect the market value of the copyrighted good.
The second claim by the plaintiffs was that Napster was actively contributing to copyright infringement since it had knowledge of widespread file sharing on their platform. Since Napster took no action to reduce infringement and financially benefited from repeated use, the Court ruled against the P2P site. The court found that "as much as eighty-seven percent of the files available on Napster may be copyrighted and more than seventy percent may be owned or administered by plaintiffs."
The injunction ordered against Napster ended the brief period in which music streaming was a public good – non-rival and non-excludable in nature. Other P2P networks had some success at sharing MP3s, though they all met a similar fate in court. The ruling set the precedent that copyrighted digital content cannot be freely replicated and shared unless given consent by the owner, thereby strengthening the property rights of artists and record labels alike.
Music streaming platforms
Although music streaming is no longer a freely replicable public good, streaming platforms such as Spotify, Deezer, Apple Music, SoundCloud, and Prime Music have shifted music streaming to a club-type good. While some platforms, most notably Spotify, give customers access to a freemium service that enables the use of limited features for exposure to advertisements, most companies operate under a premium subscription model. Under such circumstances, music streaming is financially excludable, requiring that customers pay a monthly fee for access to a music library, but non-rival, since one customer's use does not impair another's.
Music streaming platforms have grown rapidly in popularity in recent years. Spotify has over 207 million users, as of 1 January 2019, in 78 different countries, Apple Music has about 60 million, and SoundCloud has 175 million. All platforms provide varying degrees of accessibility. Apple Music and Prime Music only offer their services for paid subscribers, whereas Spotify and SoundCloud offer freemium and premium services. Napster, owned by Rhapsody since 2011, has resurfaced as a music streaming platform offering subscription based services to over 4.5 million users as of January 2017. As music streaming providers have proliferated and competition has pushed the price of subscriptions down, music piracy rates have also fallen (see chart to the right).
The music industry's response to music streaming was initially negative. Along with music piracy, streaming services disrupted the market and contributed to the fall in revenue from $14.6 billion in revenue in 1999 to $6.3 billion in 2009 for the U.S. CD's and single-track downloads were not selling because content was freely available on the Internet. The result was that record labels invested more in artists that were "safe" – chart music became more appealing to producers than bands with unique sounds. In 2018, however, music streaming revenue exceeded that of traditional revenue streams (e.g. record sales, album sales, downloads).2017 alone saw a 41.1% increase in streaming revenue alone and an 8.1% increase in overall revenue. Streaming revenue is one of the largest driving forces behind the growth in the music industry. In an interview, Jonathan Dworkin, a senior vice president of strategy and business development at Universal, said that "we cannot be afraid of perpetual change, because that dynamism is driving growth."
Bandwidth and storage[edit]
A broadband speed of 2 Mbit/s or more is recommended for streaming standard definition video without experiencing buffering or skips, especially live video, for example to a Roku, Apple TV, Google TV or a Sony TV Blu-ray Disc Player. 5 Mbit/s is recommended for High Definition content and 9 Mbit/s for Ultra-High Definition content.[46] Streaming media storage size is calculated from the streaming bandwidth and length of the media using the following formula (for a single user and file): storage size in megabytes is equal to length (in seconds) × bit rate (in bit/s) / (8 × 1024 × 1024). For example, one hour of digital video encoded at 300 kbit/s (this was a typical broadband video in 2005 and it was usually encoded in a 320 × 240 pixels window size) will be: (3,600 s × 300,000 bit/s) / (8×1024×1024) requires around 128 MB of storage.
If the file is stored on a server for on-demand streaming and this stream is viewed by 1,000 people at the same time using a Unicast protocol, the requirement is 300 kbit/s × 1,000 = 300,000 kbit/s = 300 Mbit/s of bandwidth. This is equivalent to around 135 GB per hour. Using a multicast protocol the server sends out only a single stream that is common to all users. Therefore, such a stream would only use 300 kbit/s of serving bandwidth. See below for more information on these protocols. The calculation for live streaming is similar. Assuming that the seed at the encoder is 500 kbit/s and if the show lasts for 3 hours with 3,000 viewers, then the calculation is number of MBs transferred = encoder speed (in bit/s) × number of seconds × number of viewers / (8 × 1024 × 1024). The results of this calculation are as follows: number of MBs transferred = 500 x 1024 (bit/s) × 3 × 3,600 ( = 3 hours) × 3,000 (number of viewers) / (8 × 1024 × 1024) = 1,977,539 MB.
In 2018 video is more than 60% of data traffic worldwide and accounts for 80% of growth in data usage.