Music downloads

By October 25, 2006New Media, Web2.0

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The music industry just isn’t getting it.  From paidcontent last week – Music Industry Goes P2P Lawsuit Crazy: 8,000 announced todayUniversal Music Sues Grouper and Bolt.com; $15k per infringement and Universal’s Long Tail Generated 250,000 Downloads in Seven Months.

Get with the programme people!

Getting track costs on legitimate sites down to low levels – say 10p per track – and keeping the DRM to an absolute minimum.  IMHO that is the only way the record industry can preserve any value in the music download market.  This is what eMusic is doing.

As I’ve said before content prices are heading towards zero and the value is going more and more to experiences not products.  Even Microsoft are talking about this in terms of their software. 

People will pay:

  • For stuff  that delivers a fun experience – like gigs
  • For things that bestow identity – like merchandise and ringtones
  • For services like long tail filters that reduce their search costs – I’m not sure how big this market is, but services like Last.fm are generating huge numbers of users

THEY WON’T PAY (much) WHEN THE ALTERNATIVE IS FREE

Record companies doing a King Cnut and believing they can turn the tide are not doing themselves any favours.  Suing your customers is not usually a recipe for long term success either.  That said, they do appear to be having some success – the first paidcontent link above says successful suits against large uploaders usually result in fine of around $3,000, which I suspect means they will persist with this strategy for a while.

Spiral Frog recognises this and is an attempt by the record labels to hedge their bets and offer an ad supported download service.  It has been widely panned in the blogosphere but a lot of the criticism seems to stem from the fact that it is supported by the labels.  It will be interesting to see how it goes.

  • I think the strategy of suing downloaders has actually worked quite well – P2P downloading has been quite effectively crippled. The labels have targeted the largest nodes (people uploading the most files) for law suits which discourages others from sharing a large quantity of files. To a great extent the user-experience now on P2P music sharing networks is worse than it was a few years ago, and most definately worse than Napster. People are using things like allofmp3 and ripping CDs into mp3s but there is no major P2P network that has massive traction these days.

  • I think the strategy of suing downloaders has actually worked quite well – P2P downloading has been quite effectively crippled. The labels have targeted the largest nodes (people uploading the most files) for law suits which discourages others from sharing a large quantity of files. To a great extent the user-experience now on P2P music sharing networks is worse than it was a few years ago, and most definately worse than Napster. People are using things like allofmp3 and ripping CDs into mp3s but there is no major P2P network that has massive traction these days.

  • Of course this is only helping to extend the life of the existing business model and not generating new value from new services (like last.fm etc) as you correctly point out.

  • Of course this is only helping to extend the life of the existing business model and not generating new value from new services (like last.fm etc) as you correctly point out.

  • Nic

    There is no way that heavily DRM’d, subscription “rented” music has the same net present value – and thus price – as a clear content CD that cannot be destroyed. Artificially forcing its price up (to make people buy CD’s again?) is not a sustainable strategy, so I can only assume this is a stopgap approach to maximise delay in revenue loss – with a huge risk of alienating the customer as you say.

    The one that really interests me though is that Long Tail you mentioned. There is a lot of music I would like that I cannot buy any more because it is too old/obscure/foreign etc. Heck, I’d pay *more* for that stuff!

    I think there needs to be a href=”http://broadstuff.com/archives/17-Evolution-of-Digital-Rights-in-a-Web-World-Use-it-or-lose-it.html”>Use it or Lose it concept to stop people sitting on these unpublished rights and not making them available.

  • Nic

    There is no way that heavily DRM’d, subscription “rented” music has the same net present value – and thus price – as a clear content CD that cannot be destroyed. Artificially forcing its price up (to make people buy CD’s again?) is not a sustainable strategy, so I can only assume this is a stopgap approach to maximise delay in revenue loss – with a huge risk of alienating the customer as you say.

    The one that really interests me though is that Long Tail you mentioned. There is a lot of music I would like that I cannot buy any more because it is too old/obscure/foreign etc. Heck, I’d pay *more* for that stuff!

    I think there needs to be a href=”http://broadstuff.com/archives/17-Evolution-of-Digital-Rights-in-a-Web-World-Use-it-or-lose-it.html”>Use it or Lose it concept to stop people sitting on these unpublished rights and not making them available.

  • uh oh….thats Use it or Lose It

    grovel.

  • uh oh….thats Use it or Lose It

    grovel.

  • we are going working with a partner to deliver $0-$0.98 music via RSS. shoudl be out next week. looking for vc.

  • we are going working with a partner to deliver $0-$0.98 music via RSS. shoudl be out next week. looking for vc.

  • nic

    Thanks for the comments guys.

    James – Good points. I just checked and digital music sales in H106 were just shy of $1bn so the music industry is clearly doing something right. You obviously know the music filesharing services well, but I believe Limewire is getting a lot of usage.

    Alan – Use it or lose it might be a bit radical!!!

    Nick – inclue looks interesting – neat idea, tough market though. California is a bit far afield for us here at Esprit, but good luck with the fundraising.

  • nic

    Thanks for the comments guys.

    James – Good points. I just checked and digital music sales in H106 were just shy of $1bn so the music industry is clearly doing something right. You obviously know the music filesharing services well, but I believe Limewire is getting a lot of usage.

    Alan – Use it or lose it might be a bit radical!!!

    Nick – inclue looks interesting – neat idea, tough market though. California is a bit far afield for us here at Esprit, but good luck with the fundraising.

  • Nic…

    I explained more of my thinking in my blog article (address as above), but essentially I think the stuff will probably become available anyway, so by not admitting that will in fact be allowing lost revenues. Help people to help themselves and it may actually be valuable revenue producing content.

  • Nic…

    I explained more of my thinking in my blog article (address as above), but essentially I think the stuff will probably become available anyway, so by not admitting that will in fact be allowing lost revenues. Help people to help themselves and it may actually be valuable revenue producing content.

  • I put a shout out here for iTunes. Most consumers just want somethign simple, in fact I find relatives over the age of 30 even have difficulty understanding iTunes so the thought of downloading MP3 files and using Windows Media Player to transfer to an MP3 player or ‘burn’ to a disc is never going to happen.

    iTunes works because it is so easy to use – to buy, to listen, to transfer to the most popular portable digital music device.

    People working in tech industry MUST always take a step back and see, as much as possible, from the average ‘joe’ point of view. They are not interested in DRM, as long as it works how they want, when they want and where they want they couldn’t care less about all this other stuff.

    Spiral Frog has to be one of the worst ideas ever – lets actively promote giving away our most valuable asset.

  • I put a shout out here for iTunes. Most consumers just want somethign simple, in fact I find relatives over the age of 30 even have difficulty understanding iTunes so the thought of downloading MP3 files and using Windows Media Player to transfer to an MP3 player or ‘burn’ to a disc is never going to happen.

    iTunes works because it is so easy to use – to buy, to listen, to transfer to the most popular portable digital music device.

    People working in tech industry MUST always take a step back and see, as much as possible, from the average ‘joe’ point of view. They are not interested in DRM, as long as it works how they want, when they want and where they want they couldn’t care less about all this other stuff.

    Spiral Frog has to be one of the worst ideas ever – lets actively promote giving away our most valuable asset.

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