bestkungfu weblog

Two or three bucks per song

Filed in: marketing, music, rights, Thu, Apr 21 2005 14:08 PT

Think Secret reports that Apple will offer iTunes Mobile in June. Okay, cool. It’s a phone and an iPod mashed up. Not a bad 1.0 for that offering. But that’s not what this post is about. It’s really about the so-called competition: Sprint, Verizon and Cingular are launching competing services, charging “between $2-$3 per song”.

To the operators building these services, I have one question.

Are you fucking nuts?

How stupid do you have to be to think this is an acceptable value proposition to the listener? Let’s do the math: a CD at Sam Goody costs $19. (It’s more like $12-15 at places that don’t try to screw you.) It contains a minimum of eight songs, and that disc is your property until the pits fall off of the CD. The iTunes Music Store is only a viable concern because at $10 per album, it offers a discount off the cost of a physical CD to counterbalance what is lost: physical ownership, portability and permanency.

Let’s apply these properties to the operators’ offering: for the privilege of downloading DRMed content, which is presumably only playable on your phone, and which will disappear once you change carriers, they want to charge you more than you’d pay for a DRM-free, higher-quality, utterly flexible CD. Never mind how frustrating I would imagine a pre-3G interface on tens or hundreds of thousands of tracks will be. Yes, I know that the cost of the DRM is high. But as the saying goes, your failed business model is not my problem.

The part that kills me about this is that the operators’ offering is going to be such a spectacular failure that they will walk away shaking their heads and saying that the market wasn’t ready for them. Then they’ll spend 5 years holding off on giving us higher bandwidth and more advanced services, because they won’t be able to figure out anything to sell over that connection besides ringtones. I have no confidence that they will eventually realize the strategic error in their thinking, and as a result engage in a market conversation. It seems that’s not what a mobile provider does.

The carriers would have been wise to adopt the Napster To Go model. Add $15 a month to your mobile bill (a great deal for operators who wish for $100 per subscriber per month), and have access to all the music in the Napster catalogue. Even better from Napster’s perspective, the devices have limited storage space relative to desktop machines, and limited bandwidth with which to suck down files. That beats the hell out of $3 for a single download. The way I see it, if I’m going to pay money for music that I’m not going to actually own, I want to not-own all of it.

Comments are closed.

Powered by WordPress (RSS 2.0, Atom)