There have been a couple of reports today (here and here) that strongly suggest that consumers now regard music as essentially “free.” Wired magazine also implied that’s the popular opinion in an article on Facebook and Spotify. It’s on the internet, available, without need to pay a dime for it, right? Of course, Big Music loves this sort of commentary as it provides fodder for their fight to censor the internet with heinous bills such as PROTECT IP and SOPA under the cause of “protecting copyrights.”
What is really going on is a major transition in the market online (the Wired article also stated this). Since the advent of the MP3 file format, Big Music has staged an all-out war against online music. The cost has been enormous, not only in litigation costs but in lost revenues, as in lost due to the stupidity of Big Music not to embrace the internet as a new distribution channel. Bits and bytes are hard to control, so illegal downloads (not “piracy” and not “file sharing” in my view) took up the vacuum left by Big Music bent over with their heads in the sand.
Yes, thank Apple for making a break in their wall, albeit with their own rapacious grab for market control. They did get Big Music online, and guess what? People paid for it.
But 99 cents per song, or $9.99 per album for a digital file really is obscene. Those are prices from vinyl days! It is too much to expect a person to either replace their music collection, or build a substantial new one at those prices. Again and again it was pointed out that an iPod that held 10,000 songs was going to cost $10,000 to fill! People are not stupid.
Now that broadband is near ubiquitous, and disk storage costs are dropping by the hour, the internet is coming to fulfill its next promise: our digital data anywhere, anytime, on any digital device. Pioneers like Pandora (a favorite) showed the way to the great jukebox in the cloud.
Of course Big Music has been at war with those business models too, whacking at them with royalties, licensing fees, forced regulations, and lawsuits every which way to either run them out of business or bleed them for every penny they can.
But the cloud model is loose, and it is gaining traction with a variety of companies that are diverse in their methods. Pandora is one, Spotify another, LastFM, MOG, Grooveshark, Rdio, Amazon, Google, Microsoft, and even Apple are competing for the online cloud music business.
To do so many have followed the time-honored internet business model of offering something for free. Pandora, Spotify, Google Music, Rdio, MOG all offer free subscriptions. But all of those companies do want your music dollars – really.
Therein lies the problem; I have accounts on Pandora, LastFM, Spotify, Amazon, and eMusic, of which only the latter do I currently pay for. I also buy from time-to-time on Amazon. I can’t afford to pay for every service that offers something unique or interests me, especially in these economic times. Do I wish I had the bank balance to have paid accounts on one and all of these services without a care? You bet! But I also have a Netflix account, buy Amazon movies, pay for cable … add in some daughters’ online music accounts, and my entertainment bill goes even higher. Subscriptions are bleeding the modern consumer from every direction.
Not all of these businesses are going to make it. The market will work and the best and/or strongest will succeed. Hopefully one will rise to the top; the one that combines music exploration (Pandora), album streaming (Spotify, Zune), downloads for offline listening (eMusic, Amazon, iTunes, Zune), mobility (Pandora, Spotify, iTunes, Amazon, etc.) and social (LastFM) with music info (AllMusic, Gracenote) and music commentary and reviews (Pitchfork, AllMusic). That would be the online music winner. A subscription of $20-$25 per month would be absolutely acceptable for the freedom and richness such a service would bring, and would be fair as a serious music lover would likely not need more.
Right now it is a competitive market, with lots of choices. So no, I’m not going to pay for every service, and lard my PC, netbook, and smartphone with a half-dozen apps to play them. But yes, if you offer a free version, then at this time, I’m going to help myself, and thank you for it.
People do want to pay for music. Concert receipts continue to climb (as do the damn ticket prices and “fees” venues lard in!). Illegal downloads are declining (albeit slowly). People are paying for these services mentioned and more. Everyone is just not going to pay them all, i.e., every online music business, especially if you offer a free option. Just because more people are using your free service than the paid is not an indicator that they don’t want to spend money with you; it’s more likely an indicator that you are not providing enough of a unique service or value to warrant them to pay you over another service or business that takes their money.
We’re also not going to be suckered with high prices for digital content. $10 per month or more for just streaming music is too much; I pay Neflix $9 per month for streaming video. Furthermore, we all know a digital file online is a source infinite people can enjoy, so the cost of creating that file, hosting, and distributing it – irrespective of the creative cost in making it – is negligible. I know that puts the squeeze on the Pandoras, eMusics, Amazons, and Spotifys out there, cuz Big Music wants the companies to pay, and pay dearly. Big Music has stuck online companies with stiff royalties that jack up the their costs. That’s an attitude the market will continue to brutally correct by people choosing the services with the greatest value and broadest selection – or just illegally downloading what they want.
When pigs fly, hell freezes over, or Big Music finally sees reason, people will pay for music. We know it isn’t free. Psst, Big Music, you are the one that could make it happen.