Pseudo-streaming is when an online merchant (e.g. Amazon, iTunes, Netflix) will allow consumers to download digital media files but will not provide the metadata required to identify and process the transaction using standard electronic commerce systems. As a result, the transaction must be processed by hand or completed manually. The "pseudo" in "pseudo streaming" refers to the fact that the online platform is pretending to be a streaming service by providing digital media files for download, but does not follow standard protocols.
How Pseudo-streaming Affects Merchants?
By turning their back on standard electronic commerce models, merchants using pseudo-streaming are likely losing out on increased revenue opportunities. A recent report by Digital Music News suggests that Amazon sells 95% of its music through third-party retailers and other platforms while only offering 5% through its site. The primary reason for this is because Amazon refuses to offer product pages for these purchases, which means they cannot be linked to a customer profile or used as a qualifier to increase sales conversions with personalized recommendations. Furthermore, this prevents merchants from leveraging its powerful direct-to-consumer platform to upsell additional merchandise.
How Pseudo-streaming Affects Consumers?
The same report claims that an estimated 20% of music listeners buy their digital downloads without having any idea what the quality will be like. This is because the content is often streamed in a separate application, which means the conversion process often begins with only a vague understanding of what it is they are even purchasing. There are also reports that streaming services account for between 50%-80% of revenues while only accounting for 15%-20% of total usage among consumers. With numbers like these, it would seem that streaming doesn't exactly offer the best value compared to owning your music.
The Biggest Problem For Pseudo-streaming
While there will always be an audience that prefers streaming as it pertains to music and other forms of media, the value proposition provided by pseudo-streaming is rather suspect at best and completely misleading at worst. If we compare this to eCommerce in general, we see that merchants and consumers both derive enormous value from the ability to transact online. However, if we compare pseudo-streaming to eCommerce in general, we find that its flaws can cause several major problems for both parties:
Merchant Pseudo-Streaming Problems:
1. While most transactions cannot be completed on Amazon, iTunes, or Netflix they can be completed on third-party sites that are not officially supported. This means that all transactions must be processed manually which makes it easy for errors to slip through the cracks.
2. Merchants cannot link to product pages directly from social media, email campaigns, paid search, or any other digital marketing activity. This inhibits their ability to target new customers with personalized messaging and creates additional work behind the scenes as manual touches are required throughout the advertising funnel.
3. By turning their back on standard eCommerce models, merchants using pseudo-streaming are likely losing out on increased revenue opportunities due to a lack of data that could help them better understand who is buying what, when they're doing so and where they're located geographically among other things.
Consumer Pseudo-Streaming Problems:
1. Customers are often left wondering what the quality will be like because it's streamed in an external application. This means they will not know exactly what it is they are purchasing until after they make their purchase and download the file which can lead to additional business for merchants who stand by their product.
2. While users may think that streaming apps offer unlimited access, many of them limit how many songs or videos you can listen to or watch before requiring a paid subscription. This creates confusion among consumers as there is no clear distinction between which services charge per stream and which ones require an upfront subscription fee. According to Cnet, Spotify accounts for $1 billion in music streaming revenue while only accounting for 15%-20% of total music streaming usage among consumers. With numbers like these, it's easy to see why more and more people are abandoning pseudo-streaming apps in favor of services that offer unlimited access for a fixed fee.
3. Bandwidth caps on home internet connections make streaming from the cloud more expensive than purchasing your digital content outright which can add up quickly if you don't consider data cap limits. If you were to purchase every song on iTunes at their standard 256 kbps bitrate, you'd be looking at upwards of 100 GB worth of file downloads just from one major album release. At an average price point of $1/track, this would cost over 100 dollars. If you were to continue at this pace for every major album release (assuming they're all available on iTunes), you'd be looking at a monthly streaming bill of $3000 per month. If we consider that most people only stream music from the cloud, the average is closer to $300/month or $3600/year and if we factor in an average home broadband connection of 3Mbps, this would equate to approximately 8 hours worth of total daily usage which is completely doable given current time length estimates for popular songs.
While the promise of pseudo-streaming is great, there are some serious bumps in the road that have caused more problems than they've solved. The lack of transparency concerning pricing models combined with the inability to directly target new customers has left both merchants and consumers alike searching for better solutions. Because modern lifestyles are centered on mobile devices and the Internet, it's only a matter of time before we see these issues solved and streaming becomes an everyday part of life just like watching television. The question is whether or not you're going to be ready for this change when it comes.