Music downloads – a new business model
Necessity is the mother of invention they say. How true is this statement!. When you thought the Music Industry is doomed because of piracy from free MP3 downloads, someone out there comes with a new model.
In the above chart from Economist you can see that the falling sales of physical (Audio CD) media is not being compensated by the rise in Digital sales. The Digital sales comes predominantly from iTunes (and other similar pay per download services) and from subscription services (like Rhapsody) which offer a flat fee per month for unlimited songs. Both the models have produced mixed results and are expected to continue with no clear winner as the choice depends on individual preferences. One clear trend that emerged in the last one year was the death of “DRM” with Apple leading the way and Amazon following it. As Nicholas Negroponte wrote in his classic book “Being Digital”, you can never categorize an individual “bit” (Binary 1 or 0) to be of a particular character (Porn, Politics, News, Sports and so on), so policing the Internet for Piracy can never be fool-proof. I believe policing is certainly not the fix for increasing music revenues, instead a new business model that ensures ubiquitous DRM free music to listeners world over and fair-price/compensation to content producers will assure more success. World over many models are being experimented including Ad funding – which I feel will be of limited success, will not be a failure but also not a block-buster. In this connection, a new business model tried out by Nokia in its “Comes with Music” (CWM) looks very promising.
CWM simply reverses the economics of Music Industry. Instead of paying for each song or track, your music cost is loaded on to the listening device. You buy the Nokia handset for around $230 and you get unlimited songs for one year, after which you can buy a subscription or buy a new device. Of course, Nokia wants you to buy a new device every year and that’s the attraction for them to try this model. This bundling of content cost on to the device is in a way similar to TV License fee in UK, where a tax that is collected to watch TV in UK helps government to subsidize BBC content production costs. This is the reason why many of the content in BBC websites are restricted by IP to permit UK viewers only.
For me, I hope someone in India (may be Reliance Big or Hungama or Airtel or Times) brings out this model for India. Unfortunately, till date there is no comprehensive subscription based sites in India offering Indian Film and Classical music. You are left with buying physical media then ripping it yourself (which is what I do) or paying blatantly expensive price for each track to legal sites or simply pirate.