When was the last time you browsed through albums in a music store? Heck, when was the last time you were in a music store? (a real one, iTunes doesn’t count!) If you are over the age of 30, then the way you purchase and consume music has probably changed dramatically in your lifetime, but where will it all end up? Companies are experimenting with several models for peddling music online.
While in Spain iTunes is mostly used by the true Apple faithful, in the United States it has become mainstream, recently surpassing Wal-mart to become the number one music seller. Apple has managed to corner the market in America for several reasons. First and foremost, its music devices and software are elegant and intuitive. Second, illegal downloading is prosecuted vigourously in the United States. And finally, it’s cheap! At $0.99 per song, you can purchase that cool ditty that you just heard for less than the price of a soda.
This is an interesting model that has been used with some success in the USA with digital radio. On a recent trip, my rental car was equipped with several hundred commercial free radio stations with everything from music to talk to sports and more. The two biggest companies in America (XM and Sirius) recently merged, making for a lack of competitors in the American market.
Another interesting subscription based model being tested in several markets at this time is Nokia’s Comes With Music. Consumers who purchase a “comes with music” phone from Nokia receive a 1-year subscription to the Nokia music store. Subscribers get unlimited downloads from a library of several million songs. Of course, Nokia hopes customers will re-subscribe to the service, or continue to upgrade their “comes with music” phones each year as their subscriptions expire. You can read the Nokia press release about the Comes With Music service from October 2, 2008 by clicking here.
Advertising is the answer to all online revenue problems, right? It would seem that this model for the music industry needs to be re-thought. Old-style radio stations are seeing listeners defect in droves, and in the online world, Warner Music has been disappointed with its attempt to make money with music streams on MySpace. Revenues are low because Warner negotiated a deal for a percentage of the advertising revenues instead of the traditional fee per stream. Since advertising revenues have been dismal, Warner is said to be considering pulling out of the deal altogether. You can read the story at TechCrunch by following this link:
I’d like to know:
(1) Can you think of any innovative methods of selling music besides the 3 discussed above?
(2) Do you download music from the internet? Do you pay for your downloads?
(3) iTunes charges $0.99 per song. What price do you think is a “fair” price for a single song? Would you be willing to download a song for free, if it came with a short ad at the beginning and end?