In March, 2007 I wrote an article for TechLaw Forum comparing the benefits and drawbacks of music sites that used DRM against those that did not.* I summarized the situation thusly:
DRM-based music stores can provide music for rent, something the labels have been pushing since the earliest days of online music sales. But although predictions of the demise of ala carte pricing have been rife for years, music for rent hasn't caught on in a big way. The top two online music stores, accounting for 82% of the market, are built around a la carte pricing. Apparently while some consumers are fine with renting music, most of them want to own it.
By far the best response came from Manu Sporny, founder of the DRM-free Bitmunk service, who focused on the key question:
Subscription is what large corporations want because it guarantees a stable revenue stream for a company - once you have a subscriber, you don't have to try as hard to keep selling to them. It's automatic once they're hooked and it takes quite a bit for them to stop subscribing.
Unfortunately for the large corporations - subscriptions work best with resources that you consume on a regular basis. The jury is still out on whether or not music falls into that category. I agree that it doesn't look like people want to rent music right now - but we're still too early in the process to make the call.
In the hours since Apple's iTunes in the Cloud service was unveiled, there has been some gnashing of teeth about how Apple should have rolled out a subscription option. But why should Apple or anyone else create another online subscription music service? The Internet is littered with the dead bodies of subscription services, from the labels' own PressPlay to Windows DRM failures Ruckus, SpiralFrog, and Yahoo! Music.
Yes, Rhapsody lives on, and eMusic provides a subscription service. But by the RIAA's own methodical count [PDF], subscription services accounted for a mere $200M in revenue, against $828M for downloaded albums and over $1.3B for downloaded singles. Revenue for subscription services actually decreased by 5.7% from 2009 to 2010.
What about Spotify, you ask? The service has over a million paid customers, but has yet to launch in the United States and has yet to turn a profit. The RIAA so far isn't playing ball with the Swedish upstart, and may never, if history is any guide.
Maybe someone will finally dial in subscriptions just right and in four years we'll all have abandoned iTunes. Or perhaps in 2015 downloads will still dominate, and the subscription-powered future will still be just around the corner.
* TechLaw Forum was archived and moved to a horrid ColdFusion setup after I left, hence the embarrassingly mangled formatting.
Ω
About | Archive | Feed | Inspiration
twitter: @erikschmidt