Friday, October 12, 2007
Universal Effort to Unseat iTunes Won't Work
Sony BMG Music Entertainment is already on board, and Warner Music Group has been brought into the discussions. Music player companies such as Microsoft would pay the industry a fee of up to $90 per player sold which would be passed on to consumers, who would have free access to the combined music catalogs.
As much as I agree that someone needs to break Apple's hegemony in music downloads, this is not the business model that will do it.
First off, the DOJ's antitrust unit would probably find that a music service run jointly by the industry is a monopoly. The music industry should instead jointly bargain with any and all music services to provide more options, not less.
Creating all you can eat subscription services for as low as $5 per month could destroy music industry revenues. If existing services can't afford to pay the royalties for less than $13 (as RealNetworks charges), then how will the copyright holders and composers both be sufficiently compensated at only $5 per month?
And what about folks like me who only listen to music through their PCs? What would my choices for downloads and subscriptions be? Not everyone likes the subscription model, so downloads must remain an option, or else piracy will escalate.
The music industry basically wants hardware companies to pre-pay for the music that would be consumed over the lifetime of the player. A more viable option would be a lower licensing fee to the hardware companies ($25 each?), but then an equitable split of the subscription fees. Consumers could be given a free 90 day subscription out of this fee, and the additional fees are split between the hardware companies and the industry.
Universal may be pissed at Apple right now, but this plan would do as much or more harm to itself as to iTunes.
Posted By John Gartner at 09:45 AM
Permanent Link: Universal Effort to Unseat iTunes Won't Work
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