Universal Music has announced it is moving its catalogue to a "free with adverts" model:
Backed by Universal, Spiralfrog will become one of the first sites to offer free music legally. Fans will be able to download songs by the record company's roster of artists, including U2, Gwen Stefani and The Roots.
The service - which will be supported by advertising, unlike other legal download sites that charge for music - will launch in the US and Canada from December. It will become available in Europe in early 2007.
If the business succeeds, that will be the new standard price. If it fails, then it will take another year or two, I would predict, before the price goes back down to $0 (in delicious irony, the above article is now only available for a pound!).
There are a few reasons to believe that the business may not succeed -- massive lobbying by the others, duff selection, lousy adverts and plenty of time before now and then -- so this is a non-trivial question. Here's another reason:
Josh Lawler, a US-based music industry legal specialist, said news of the new service was "inevitable". He said questions over how artists would be paid may make some reluctant to agree to the free service. "SpiralFrog will have to find a way to pay artists from the advertising dollars they are generating," he added. "But they're not necessarily going to know how many advertising dollars there are and so some artists are going to be hesitant about it."
Here's my favourite quote, from a HMV rep who otherwise was quite positive (pay a pound for thereference) :
"What is a little concerning is that for a long time now, the trade body, BPI, has been anxious to put across an anti-illegal or piracy message, which suggests that music is of intrinsic value and people should be prepared to pay for it, so this may give a conflicting, mixed signal."
There's nothing "conflicting, mixed" about free. To see why this was inevitable:
"A report published last month by the International Federation of Phonographic Industries (IFPI) claimed 40 illegal downloads were made for every legal one in the US. The ratio, believed to be much the same in the UK,"
Now, I don't believe those numbers, necessarily, as I doubt the IFPI even bothered to pretend they weren't exaggerating. But even if in the ballpark, the amount of sharing dominates any other use, including practically everything else that isn't to do with music. If you believe the ISP grumbles, that is.
Time for a new model - the physics is the reality, the economics is the deal, and the legal stuff just has to keep up. BigMac suggests Pandora's Music Genome Project.
Another great quote:
"The US radio industry generates $20 billion a year in revenue and they give the product away for free," he said. "Record labels generate $12 billion a year and they sell their product."
Here's some clues on the new model:
Users can download an unlimited number of songs or music videos if they register at the site and watch online advertisements.
The tracks cannot be burned to a CD, but users will be able to transfer music to portable media players equipped with Microsoft Windows digital rights management software, Ford said. However, the service will not work with Apple Computer's computers or its iPod music players.
Funny source for the nitty gritty!
Oh, I forgot to mention -- what's the nexus with FC? That's easy -- all those payment systems that were banking on micropayments from music downloads can close up shop. They should have studied more economics and less marketing.
2nd addition, to stress the move to $0 content:
Sony to buy Sausalito's Grouper
Sony Pictures is expected to announce today that it has acquired Sausalito Internet video-sharing company Grouper for $65 million.
Teaming up with Sony further highlights the role amateur videos -- and the companies that host them -- are having in changing the Hollywood landscape.
Traditional entertainment companies are working with Silicon Valley start-ups to navigate a new, on-demand entertainment world. Tuesday, the popular video-sharing site YouTube announced a new video advertising platform, and its first client is Warner Bros., which is promoting Paris Hilton's debut album.
Grouper's technology allows a user to easily take a video from its site and post it on third-party sites such as a MySpace or Blogger page. Its videos can also be watched on devices other than your personal computer, such as a video iPod.
For more naysaying, see BigPicture as suggested by Frank in comments below.Posted by iang at August 30, 2006 09:05 AM | TrackBack