1982 Called. It Wants Its Digital Music Distribution Model Back
by John Paczkowski
Posted on September 22, 2008 at 8:29 AM PT
Overall CD sales are plummeting after eight years of unflagging erosion. Digital music sales now account for 15 percent of recording industry’s revenues worldwide and 30 percent in the United States, according to recent data from the International Federation of the Phonographic Industry. And those numbers are climbing faster than ever. Consider: This past June, Apple (AAPL) said it has sold some five billion songs on its iTunes Store. Clearly, physical media are giving way to the Internet as a means of music distribution. What better time, then, to reinvent the music industry’s business model for physical media as SanDisk (SNDK) hopes to do with its new microSD memory card album format?
This morning the company announced slotMusic, a compact memory card-based music format that can be played on cellphones, PCs and some MP3 players. It relies on MP3s without digital rights management schemes and is backed by Universal Music Group, Sony BMG Music Entertainment, Warner Music Group and EMI Group, all of which apparently believe that more physical media is the best way to reinvent their business model in the era of digital distribution. Though as SanDisk VP Daniel Schreiber notes, they do have their reasons. “There’s a billion phones out there and a lot of them can play music and a lot of them have a microSD slot,” he explained. “We think there’s still a need for a tangible, physical product. People will appreciate walking out of the store playing music on their phones.”
Perhaps. But will they appreciate carrying that music around on a 0.6″ x 0.4″ medium that’s about the size of a fingernail? Seems easy to lose, doesn’t it (maybe Case Logic is planning a slotMusic binder)? And wouldn’t they rather carry around hundreds of songs, instead of the dozen or so stored on each slotMusic card? And what if the memory card in their phone is already in use, filled up with contacts, applications and other data? What then? And beyond this, haven’t iTunes and Amazon MP3 made consumers more accustomed to purchasing music à la carte? Why purchase a full album at $15, when all you really want are the only two good songs on it?
Comments
This is also bound to fail. The industry is trying desperately to get back to selling whole albums but consumers don’t want to buy all music in album format. For a lot of their music, they only want to buy by the song as they don’t WANT or LIKE all the songs on the album. What the industry should focus on is putting out great albums where all the tacks are great = quality! Then and only then will people buy them. The truth of the matter is that they make more money per song by selling digitally, but aren’t selling full albums based on new digital models so overall sales go down.
Posted by Mike Forbus at September 22nd, 2008 at 10:35 amIt is an agreed thing amongst the few intelligent music executives (or ex-music executives) that the record industry as it exists today is dead. The music business is thriving however.
We had our chance and we lost it. In 2001 a friend who used to work as a country head of the rival music major BMG, told me that the top management were “running around like headless chickens”. Cut to Circa 2008 and a few cos less but not much of a difference!
In essence a generation has grown up around the world who have got used to free music, and nothing is going to change that.Mirco cards certainly wont.
Music will become free like videos are and will be used to promote the artist, who will make money from concerts etc. The publishing business will stay albeit in a smaller shrunken form. And here is the crunch, if this will be the scenario,then why will artists go to record cos? They will sign on all their rights to management cos or large tour promoters, that makes sense.
We (the record business) grew fat on two artificial rounds of growth, the conversion from vinyl to Cassette and from cassette to CD. And we thought this was the natural order of things!Of course it helped to have an industry run by failed musicians and lawyers!!
Posted by Curtis Drake at September 22nd, 2008 at 10:46 amThe old vinyl records held about 40 minutes of music. It was possible for an album to hold your attention that long with 8-10 songs that were all pretty good. All of the classic albums are from this era. CDs hold 70 minutes of material and artists decided to fill the extra half-hour with crap, just to get more royalties. That’s when the problem started, and artists are to blame more than the record companies. Labels must pay a writer the same fee for every song – good or bad.
Posted by neal doughty at September 22nd, 2008 at 11:57 amI have long had a set of criteria for a new technology supplanting an existing, entrenched one (here’s what I wrote two years ago). The slotMusic format fails on a few of the critical criteria:
The alternative has to be clearly superior in one or more ways to the existing technology.
In this case, digital downloading of music (DDM) is already the ‘existing technology’, and it’s hard to see how trying to handle tiny microSD cards with individual albums is superior to DDM (for all the reasons you cite). In other words, it’s not at all clear to me what ‘problem’ slotMusic is trying to solve; it seems to be that slotMusic causes more problems than it solves.
The alternative has to be standardized so as to achieve broad support and use, including from third-party firms.
Well, microSD does have support from third parties (e.g., cell phone manufacturers), but it is still closely tied to SanDisk.
The alternative has to be able to be used in parallel with the consumer’s existing solution rather than require the consumer to abandon his/her current solution and all the financial, emotional, and intellectual investment in that solution.
An OK hit here — except for all those folks with devices that don’t have (and probably never will have) microSD slots.
The alternative needs to expand in utility and functionality, and decrease in cost, until the user is willing to let go of his/her prior solution.
Again, and per your comments, it’s hard to see how individual albums on microSD cards will be better, cheaper, and more functional than DDM.
It short, I think it’s a fail; too little, too late. ..bruce..
Posted by Bruce Webster at September 22nd, 2008 at 3:33 pm