Friday, October 12, 2007

Universal stamps its one good foot

The desire of the RIAA companies to stop having to rely on Apple to flog its digital material has seen them throw weight behind any number of crackpot ideas - like Universal getting a dollar from every Zune sold, or signing up to Spiralfrogs or whatever, and still online music downloads means, pretty much, firing up iTunes.

So, from whichever underground lair they're using this week, Doug Morris has come up with another brilliant idea. Universal are throwing their decaying weight behind TotalMusic, says Business Week:

The world's most powerful music executive aims to join forces with other record companies to launch an industry-owned subscription service. BusinessWeek has learned that Morris has already enlisted Sony BMG Music Entertainment as a potential partner and is talking to Warner Music Group. Together the three would control about 75% of the music sold in the U.S. Besides competing head-on with Apple Inc.'s (AAPL ) music store, Morris and his allies hope to move digital music beyond the iPod-iTunes universe by nurturing the likes of Microsoft's Zune media player and Sony's PlayStation and by working with the wireless carriers. The service, which is one of several initiatives the music majors are considering to help reverse sliding sales, will be called Total Music. (Morris was unavailable for comment.)

TotalMusic! Like TotalWar! Nurturing the Zune!

The Zune must be nurtured. Nurture the Zune with TotalMusic.

While the details are in flux, insiders say Morris & Co. have an intriguing business model: get hardware makers or cell carriers to absorb the cost of a roughly $5-per-month subscription fee so consumers get a device with all-you-can-eat music that's essentially free. Music companies would collect the subscription fee, while hardware makers theoretically would move many more players. "Doug is doing the right thing taking on Steve Jobs," says ex-MCA Records Chairman Irving Azoff, whose Azoff Music Management Group represents the Eagles, Journey, Christina Aguilera, and others. "The artists are behind him."

Really? The artists want to share a very, very tiny slice of revenue with all the other artists, do they? Hmmm.

And how, exactly, does a 'hardware manufacturer' "absorb" the cost of a five dollar a month subscription? (By absorb, of course, they mean 'add a 100% mark-up and hide in the cost passed to the consumer'). We can see a mobile phone operator could charge a perpetual five dollars, but if you buy a Zune - no, imagine for a moment that you did - how are you meant to be charged an absorbed five dollars a month? Will Bill Gates pop round on the 20th of each month and ask you for another fiver? It's like the music industry don't quite understand how people pay for mp3 players and consoles. Business Week reckons the manufacturers will be asked to pay for an eighteen month commitment upfront - ninety dollars worth, which will probably add $150 to the consumer price for a product by the time taxes and admin and mark-ups are added in. Which is going to make that Zune seem even more slightly less attractive.

Of course, you can see the some of what passes for logic here - nobody wants to touch subscription services for their music, because if people wanted to spend their money on buying music only to discover their collection disappeared overnight, they'd just get divorced. So locking people into a subscription when they buy their player or change their cell carrier is a good plan for the labels. After all, for years the majors have been relying on bundling something people don't want with something they do to make some cash, from the filler tracks on albums to lame label-mates supporting the more popular bands. Nobody in their right mind would seek out a subscription to a music service, but they might just use it if the small print in their contract says they're going to have to pay for it anyway.

But then you're down to looking for manufacturers and distributors willing to build in this little 'extra' to their goods and services. It's telling that while the labels and supposedly artists are onboard, no manufacturer seems to be rushing forward. After all - people buy mp3 players without any bundled subscriptions, as they can fill them for free from their own record collections. Why would a more expensive player with a subscription have an edge over one that can be bit-torrented full?

Let's not be too cynical though - this is exactly the sort of idea the music industry needed to be coming up with in order to survive. Sadly, it needed to come up with it in 1998.


1 comment:

Duncan said...

The Zune already has a subscription model, as well as an a la carte download store. Costs more than $5 a month though.

Subscription models are a good system, but they haven't taken off. iTunes has the monopoly because everyone owns iPods, not because it's a great download service.

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