Of water and music

I don’t know who said it first but whoever did say ‘I remember when water was free and you paid for music’ has been re-quoted rather a lot.

The truth is not quite so simple. For the pre-digital generation the concept of free streaming music was very familiar. We called it radio, and in the US unlike many other markets the performers and their managers were never compensated yet were happy co-conspirators as the tracks played on the radio led to album sales and it was them that supported the music industry ecosystem. The radio stations prospered by selling advertising.

The big then and now differences are four fold:

  1. Radio listeners never gained possession of the content (although I do remember recording the BBC chart show at 5pm Sunday on my cassette recorder)
  2. They certainly never got to share that content
  3. They never got to self schedule and were restricted to the editorial whims of any given station or format
  4. Streaming music services have had very limited success in attracting large scale advertiser support

One thing does remain the same. A lot of people DO pay for music. In the US in 2008, according to the IFPI 1.1 billion digital tracks and 66 million digital albums were sold in 2008. The situation outside of Europe is less healthy. On a per capita $ basis the US spend was almost double the amount in the UK, four times more than in Germany and 20 times more than in Spain.

It is this phenomena (together with continued piracy and illegal file sharing) , possibly, that explains the drive in Europe for subscription services in Europe provided by independents like Spotify, handset manufacturers including Nokia ‘Comes with Music’ and Sony Ericsson ‘Play Now’, and networks ranging from BSkyB, Orange, TDC, Neuf Cegetel, TeliaSonera and others.

There is considerable variety in these services but the essence of them all is a monthly subscription that grants access to unlimited streaming music coupled with limited download capabilities that enable offline consumption. The twist is that the access to the stream and the ability to download persists for only the period in which the subscription continues to be paid.

Broadly speaking all these initiatives have been welcomed by the music industry but the fear must be that many users will use initial subscriptions to build their digital libraries and abandon those subscriptions for free streaming and much less frequent paid downloads after that period. If this is true the gains for artists and labels may be short term and it may need more than music to maintain a healthy subscription environment.

The most logical response is much greater content bundling with subscriptions in which single providers can price and distribute whole rafts of copywright content from music to film to TV programs and games. Doing this will simplify the market by allowing consumers a choice of providers across all their entertainment requirements and a choice of rent or own across content and platforms.

By the way; you see a lot more tap water on New York restaurant tables these days.

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