Rent or Buy: More Thoughts on the Business of Music
By David Gales
Music Purchase vs. Subscription
The Big Idea behind music subscription plans is that they may be an idea whose time has come. The debate over the benefits of music subscriptions vs. music purchases has heated up lately. A number of subscription services have been in the market for a time, including Rhapsody, Napster among others. iTunes, the world’s second largest music retailer, is said to be looking at the idea, in a bundling format with the iPod. Among music companies, there is some concern that subscriptions would be so popular they would hasten the demise of the CD, still an important profit center for music labels.
AT ISSUE: Can music subscriptions provide enough economic fuel for the music industry to replace the revenue lost by un-paid consumption of music?
BIG IDEAS VIEW: For purposes of this discussion, consumers are defined as those who listen to music on radio, online and other promotional media, and customers are those who pay to own or listen to music. There are dozens of issues around this topic, but key to our thoughts are the following.
On the customer side, the issue is choice. That is part of the value for which they are willing to pay. Some would prefer to purchase music one track at a time, while older buyers still feel a connection to full albums. Others prefer to have access to any music at anytime. Still others, the consumers, prefer not to pay for the music they consume at any level. On the creative and business side, there are artists who feel strongly that their music is meant to be listened to as a body of work; that listening to a single song, whether for sale or subscription, is like reading a single chapter of a book then moving on. The overriding issue for music labels, publishers, artists managers, songwriters and others in the business matrix is how to continue to create and market music as a profitable and sustainable product.
Leaving aside those who rationalize stealing music, it’s time for the industry to recognize that while it can exercise some control over the use of music by consumers, it cannot dictate the desires of its customers, who want choice and vote with their wallets. That choice may be the key to converting (or reverting) more consumers into customers.
The still dominant retail music sales model is in decline. The acceptance of music subscriptions is gaining ground. Major labels are contemplating several variations on subscription models, from bundle deals with digital music devices to online social network services. That’s a very good thing. Without choice, there are fewer customers and more consumers. And without customers, there is no music industry, just music consumption.
• • • The Big Ideas Report separates the real issues (Big Ideas) from the noise, so that it’s possible to move forward with confidence or simply converse intelligently with others. We identify issues that have a material impact on your business, define them succinctly and suggest a position, so you can get going. Part fact, part opinion, part alchemy, that’s The Big Ideas Report.
©2008 The Gales Network LLC • 615-646-4683 • galesnetwork.com
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