The file node (both in and out) can handle streams - it's the others that don't 
You could post an issue on the node's github page suggesting this enhancement, but there doesn't appear to be much activity there from the author so that may be fruitless. I notice there are multiple forks, perhaps one of them has already added this.
[Edit] Alternatively is there a command line method of fetching files from nextCloud? If so you could call that via an exec node.
Yet again you could get a Pi 4 with lots more memory.
@Colin I need my raspi 4 / 4GB for my home automation. The music box can be build of my old stuff.
My solution now: node-red-contrib-rsync / rsync plus some config work to access my next cloud folder for the music box.
Anyway thank you very much for your time and tries to help! @dceejay @Colin @TotallyInformation
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Actually a music box may be much more demanding on resources than home automation.
