Hearing a lot about subscriptions and flat levies for all you can eat music at CMW
March 7, 2008
Wow, I'm still somewhat shocked that there are people who believe that subscriptions are the answer. The problem is marketing. Rhapsody (and formally Yahoo!) doesn't know how to properly market the service. Yahoo! Music is the number 1 music site on the Web. If they can't market a music service I'm not sure who can. Still I even heard from one of the smartest guys in the industry that if Apple would offer subscriptions as part of iTunes that will be that, subscriptions will come of age.
Sure. Apple might increase subscriptions, but only a small fraction of people (possibly even myself if the price is right) will ever choose to have subscriptions. The reason subscriptions are only popular with a small fraction of people is not due to lack of marketing it's a result of PURE economics.
I wrote about this 3 years ago in a post called, Why Music Subscritions Fail:
"Having [a music subscription service] tell me I have 1 million songs at my finger tips for $9.95/month is irrelevant. I will never listen to a million or even 100 thousand different songs in my life time. And I only have the capacity IF I am lucky to discover 100 new songs that I like and will listen to more than once this year.
So a subscription model will cost me about 120 dollars during that year for those 100 NEW songs. And I have to pay again for them next year unless I discover another 100 NEW songs I like. So as a rational person, I would rather pay for the 100 NEW songs once for a total cost of about 100 dollars.
Now if the subscription model was less than 100 dollars you have me interested, but forget about my wife as a customer. She discovers about 3 new songs a year that she likes, so the subscription for her better be under 3 bucks."
It is also for the very same reason that imposing a flat tax/levy on ISPs and subsequently on all users regardless of their music listening habits would be viewed as EXTREMELY unfair taxation and doomed to kill any government which tried to levy it. I believe that the only acceptable levy would be so close to the margins (cost of delivery) that very little/meaningful money at all would ever make it back to an actual artist. In that situation what would be the purpose of the levy again?
disagree
i disagree with this on the subscription model. Whilst you could argue that people's perception of the economics is one of the reasons that the subscription model hasn't taken off you can't argue that it is just the actual underlying economics as described here at fault. Firstly, i think that there are a lot of people who would like to and do discover more than 100 tracks per year. This is under 10 albums per year. Secondly you have to admit that by having an unlimited subscription it increases your ability to discover more than 100 tracks and still be able to play other stuff you might not want to actually own. Lastly i do think that if itunes and last.fm were to deliver great subscription plans on top of what are already good user experiences then this would have the desired marketing effect of bringing music subscription into the mainstream.
Is that really a disagreement?
Hi Dave,
Thanks for the comment. I don't really see you disagreeing with my economic logic, rather you are disagreeing with the results of that logic.
While you are correct that 100 tracks COULD represent 10 albums. Wouldn't you agree that finding all 10 or so tracks on any album (and repeated every year) would be actually quite rare? One or two quality tracks appears to be the norm these days with very few notable exceptions. That would equate to 50 albums you would need to listen to. And that also assumes that each of those 50 albums have at least two songs you like and would like to add to your collection.
Remember during the 'hay days' of the nineties only 15% of North Americans actually bought 1 (ONE) or more CDs in a given year. Think about that. The assumption by subscription/Flat Fee advocates is that the vast majority of music will be consumed by this way (about $100-150 per year), where as the economics says that the vast majority of people are not willing to pay ANYTHING for music.
The people who bought music are a small fraction of the population. I used to buy 60 CDs a year in my 20s. Back then a subscription model would hold interest for me. It may still, but the vast majority of people - even those who buy music - have NEVER spent $100 on recorded music in ANY year. So why do we expect them to do so now?