7 comments

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  eee_eff

  1 year ago

  Tim:
  
  As always, an intersting post. But it doesn't explain one fact that Ihad observed: the site allofmp3.com charged between 8 cents and 20 cents per song, and apparently they made money.
  
  So, i agree that the price will approach zero, but I also believe that the black/grey markets serve information purposes, and in the case of allofmp3.com, it showed the recorded music industry a pricing strategy that will work well.
  
  Now, they will take that information and implement it, I believe...
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  Tim Lee

  1 year ago

  If you read Shirky's article, one of the things he talks about is bundling as an alternative to micropayments. So one of the ways to deal with falling prices is to give more songs in a bundle. (eMusic also does this). In the medium-term, I think this strategy might be somewhat effective. An even more effective strategy might be something like Netflix, where you simply pay a flat monthly fee for access to a massive database of every song ever recorded. If they price it right that could generate revenues in the ballpark of 10 cents per song.
  
  In the long run, though, I don't see any reason to think a price of 25 cents or 10 cents is any more sustainable than $1. The newspaper industry is gradually discovering that it makes more sense to give away content and sell ads than to try to charge for the stories themselves. While I certainly could be wrong (markets surprise people all the time) my guess is that the same thing will happen to music.
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  eee_eff

  1 year ago

  The newspaper industry is gradually discovering that it makes more sense to give away content and sell ads than to try to charge for the stories themselves.
  
  Just today the price of the St. Louid Post Dispatch, went up to 75 cents...
  
  Allofmp3.com did kind of bundle, in that you had to start your account with $10.00, and add increments of $5.00..
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  Tim Lee

  1 year ago

  ef, I'm talking about online. Offline, the economics of the news business hasn't changed so there's no reason to think the price of paper newspapers will fall.
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  Charles

  1 year ago

  "An even more effective strategy might be something like Netflix, where you simply pay a flat monthly fee for access to a massive database of every song ever recorded. If they price it right that could generate revenues in the ballpark of 10 cents per song."
  
  Tim, wouldn't you agree that flat fee all you can eat systems only work for stuff you rent, in which case you can set a limit to the amount of stuff you can "simultaneously" enjoy. Netflix works because you can only have 2 movies (or 1, or 4) home at the same time. I think people still want to own their music, mostly because, unlike movies, people are likely to listen to the same piece of music much more often (and probably much more erratically) than the movies they watch. People also want to enjoy their music everywhere, whereas most people only watch movies in a single place. So a technological solution (the "here's this box that lets you listen to movies in your living room through our service" kind of arrangement) isn't practical for music. I don't just want to listen to music in my living room. I want it on my mp3 player when I go hiking, I want it in my office when I work, I want it in my car. I want to have it at partys. I want to be able to bring it to someone else's house. You get the point. This is much easier done when I own the music in an unrestricted format than if you rent it to me, in which case you have to control it. The implementation of the "flat fee" which emusic, audiolunchbox and others have devised is a workable solution, but it supposes that one service must have a large selection of music I want. I'm not willing to pay 10$ a month for the privilege of buying music if I don't want to buy most of it. Music is difficult when it comes to rentals because ti's easy to rip and it's hard to control without frustrating the consumer.
  
  I do agree that in the end, musicians are simply going to offer their music for free (or nearly free) to anyone and everyone to gain awareness. Given what artists currently make off the sale of a cd, they're much better off giving it away for free if it can ensure a packed audience everytime they have a gig somewhere.
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  Truepath

  1 year ago

  I think there is some confusion about just what type of good music really is. I think music is more like rolex watches or the latest designer clothes then it is like a commodity. Sure there are many people who want to become rockstars and it might be nothing but chance that determines which of them do become rockstars but there will still be a limited number of rockstars because people want to listen to the same music as their friends and like to listen to popular groups that are constantly presented to them.
  
  In other words people will continue to pay for music (short of an adoption of an alternative IP model) just for the right to listen to popular music. Sure some people make a point of pride of listening to obscure stuff but most people want to listen to the big acts that are highly visible and their friends like too.
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  Tim Lee

  1 year ago

  Charles, that's a good point, but I'm not sure it's necessarily true. If the price is low enough, there might be some people (including me) who would pay for constant access to a database of every song ever made. Yes, in theory I could download a million songs to my hard drive and then cancel the service. But that's a pain. It would take a long time to download all the song, and I'll likely discover new music later that I hadn't thought of. So if the price is low enough (under about $5/month) I suspect that you could simply have a flat-fee, all-you-can-download plan without any sort of usage restrictions and you'd still have a lot of people signing up just for the convenience of being able to get the music they want when they want it.
  
  But like I said, markets surprise people. I'm definitely not going to say I know exactly what the business model will be. But it's a safe bet that people will find some.
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