Dropbox piles into crowded online music biz

(MoneyWatch) The battle in consumer entertainment has to date mostly been waged by the usual suspects, including Apple (AAPL), Amazon (AMZN), Google (GOOG), Microsoft (MSFT), Pandora (P), Spotify and a handful of others. Now they will have to make room for a potentially serious new rival: Dropbox.

The Internet cloud storage company, which has found a home on millions of computers and devices, has acquired music streaming service Audiogalaxy. It's a clever move that could quickly catapult Dropbox into a new business and create some significant competition for the existing players.

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Some online music providers offer content via download, while others let users "stream" tunes online. The latter offers huge advantages in that vendors don't need multiple copies of material. For example, Google and Amazon both provide "locker" services that let people store their content and stream it other devices. By comparison, Pandora's radio service lets users create channels to hear different genres of music.

Given the stiff competition in this niche, a big challenge in starting a new Internet music service is to get consumers to use the associated software. Ultimately, a service needs people to develop the habit of using the appropriate application.

Yet his could be Dropbox's edge. The company says that more than 100 million users already use its storage service. Equally important, Dropbox works across computing platforms, so users have access to files from Windows PCs, Macs, iPhones, iPads, BlackBerrys, and Android phones and tablets. Get used to it on one platform -- which is easy, because it works so automatically -- and you can manage it on others as necessary.

Consumers could theoretically already store their existing music collections on Dropbox's servers. The Audiogalaxy acquisition would add a locker service, as well as radio streaming. Given Dropbox's breadth of use, that could be a handy addition to its services and a new way for the company to generate revenue. And if it works for music, why not video as well?

Image courtesy of Flickr user ilamont.com

Erik Sherman

Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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