Virgin Digital Launches Service

[James Fee]

<div class='os_post_top_link'><a href='http://www.virgindigital.com/' target='_blank'>http://www.virgindigital.com/</a><br /><br /></div>"<i>The Virgin Digital Megastore offers an entire 'Virtual Virgin Megastore' right on a PC, featuring over one million available tracks for just 99" each with licenses for playing, burning to CDs and downloading to portable devices. For consumers who prefer a greater level of music-access, the Virgin Digital Music Club is a subscription-based service for $7.99 per month and enables users to have unlimited access to over 100,000 albums of on-demand, CD-quality music to experience any way a music fan can imagine. Radio Free Virgin, one of the most acclaimed online radio services, is completely integrated into the Virgin Digital service, bringing world-class radio entertainment directly to the desktops of the most dedicated music fans. The new service also features a complete digital music management tool that brings simplicity, flexibility, and power to the desktop. Users can rip and encode CDs, import digital audio from a variety of sources, burn custom CDs, create playlists, transfer to over 50 portable-music devices, and much more. Virgin Digital tames the wild-and-wooly world of digital music and simplifies it all into one elegant, intuitive product.</i>"<br /><br /><img src="http://www.digitalmediathoughts.com/images/virgin_digital.jpg" /><br /><br />Another attempt to try and make the music subscription service work, but frankly I think consumers have voted that they want to own their music and don't want the record companies controlling what they have paid for. Other items of note; this service is for US customers only, tracks are available as WMA and tracks will cost $0.99 each.

[gibb193a]

... frankly I think consumers have voted that they want to own their music and don't want the record companies controlling what they have paid for.

Isn't it a little too early to for this conclusion though? Personally, I don't think I'd be subscribing but I didn't think I'd be buying music online either!

[James Fee]

Isn't it a little too early to for this conclusion though? Personally, I don't think I'd be subscribing but I didn't think I'd be buying music online either!I don't think so. These subscription services have been out for a couple years now and I don't see them taking off. Sure there is press about it, but only because the record companies keep pushing it.

[David Horn]

We've had it in the UK for a while - I bought the new REM track the other day. Wouldn't recommend it. You have to buy credits first, it's more expensive than iTunes, and the WMA tracks are only 128kbps.

[gibb193a]

Looked at the FAQs and haven't found a reason to install it -- especially if they are only 128Kbps WMAs. I still prefer MSN Music especially through WMP 10.

[Felix Torres]

Another attempt to try and make the music subscription service work, but frankly I think consumers have voted that they want to own their music and don't want the record companies controlling what they have paid for.

You are right, customers are voting on the subject: with their wallets.
To the tune of $100-150 a year each for subscriptions to XM, Sirius, Rhapsody, Launchcast, AOL, MusicMatch, and the poster child, Napster, among others.
They are voting to the tune of 4 million unique subscriptions and counting.

The numbers are readily available, and the math quite easy, you know.
Subscriptions out-gross d/l's by 4 to 1, even today, and that is despite being tied to PCs or satellite antennas. Add in Janus and portable subscriptions, only now coming online and the case can be made that the business is still in its infancy.
Give it a year to play out before you bury the tech, why don't you?

You might even find Apple getting into the business, if they can figure out how to match Janus by then.
After all 40% margins are exactly the business Mr Jobs likes.

As for the studios controlling music distribution, yes they do.
Just watch and see how much Apple Corps gets for *access* to the Beatles' catalog for d/l sales.

One could even argue, if one were so crass, that d/l's are the worst customer value in digital music, that a subscription services offers more variety and easier music access and bang for the buck than d/l's and that those who *want* to buy are actually better served buying the music in lossless, unencrypted, CD-format. Which is what 99% of paying music customers do, anyway.

As Woodward and Bernstein said: "Follow the money..."
And for now, the bulk of the money, and the customers lies elsewhere.
Fortunately, the game *is* early and we don't have to worry about writing eulogies for d/l's, much less their more popular, if less publicized, competitors... 8)

[James Fee]

&lt;snip>
I knew you'd comment on my post, but as a past user of Musicmatch and other services, I'm not impressed, nor is anyone else. Downloads continue to outpace subscription services and considering Americans don't really care to rent anything, I cannot see them displacing downloads. The numbers you post are just so small and you combine many different types of subscriptions services in your numbers that its hard to pull out what is really a subscription service and what is a paid radio show.

You and I can go back and forth on this Felix and both of us believe deep down each is right, but I can't see any traction on subscription services from the consumer. It is all driven by the record labels and the stores that don't have overpriced iPods to offset the cost of the downloads.

Will Apple offer a subscription service? Probably, but don't expect it to change anything.

[dean_shan]

Americans don't really care to rent anything, I cannot see them displacing downloads.

I second that. Renting music is a terrable idea.

[Mojo Jojo]

Ooo look a penny, now combined with the other penny in my pocket I got two cents!

Personally, I dislike the idea of subscription services. However thats just me. Some people may like it and this offers them a service. Cool beans.

I also think in the long term subcription services will battle amongest themselves and weed each other out, eating each others business until only one is left for the subset of customers that do like to rent music.

My reasoning is tied to my experience and other peoples experience with Netflix. Before we go down the road of movies versus music and replayability, my belief in their failure has more to do with the rate of new releases. Let me explain.

At first Netflix was great, I made a list of all the movies and queued them up watching movie after movie. It was great, for awhile. In about two months I went through all the movies I wanted to see and started branching out to things I normally wouldn't rent. Most were stinkers.

At month four I found there was nothing new, new releases were a couple of months away and here I was still shelling out money. Month five a movie or two came out but instead of four dollars a movie at the local rental this method turned out to be 10 dollars per movie. I cancelled shortly after. For my friends the story was much the same.

So now we have music. At first this model is a utopia for listeners. They grab hundreds of albums from their favorite artists build up libraries of music. Then what? Of the bands I listen to, they release albums every year but more often ever other year?

I think there will come a point where people 'borrow' as much music as they can but then hit the wall of waiting for new stuff. They may try out a few new things, maybe find a new artist, but overall people's musical tastes start to gravitate to one or two types of music. Their selection becomes narrow and coupled with time to release new music from those artisit the cost of subscribing versus new music begins to flip. With two choices left, cancel and loose everything or keep paying the money, the once great utopia now looks a little bit more bleak.

Long winded of course, but that usually comes with my posts. I am not saying everyone will fall into the above category but those I have talked to site the same reasons why they will not use a subscription service.

[phillypocket]

I'm not sure why everyone is so convinced that subscription services will fail.

I realize that most people here want to own their music. Hell, I'm amongst them. However we are, by far, not a good sample of most music consumers. Or else the Tower Music's, Sam Goody's and every one else that charges over 12 bucks a cd would have died out 10 years ago. Consumers will put up with a lot of what we consider negatives if they perceive there getting enough value. Not good value, just enough. Sure they'll bitch and moan, but they'll still pay and consume. I mean despite negative press, a general feeling that they show the same things over and over again, and attack by satellite, cable TV is still going strong. And though this is certainly not indicative of every cable user, I have never had anyone tell me they were happy with what the got versus what the paid in cable rates. Or at least not since it was new (in this region) back in the 70s.

These subscription services may yet fail, but it won't be the idea that kills it, it will be the implementation.

[Felix Torres]

I'm not sure why everyone is so convinced that subscription services will fail.

These subscription services may yet fail, but it won't be the idea that kills it, it will be the implementation.

Ding-ding-ding!!!
Exactly right.
Way too early to predict anything.

Subscriptions services will fail if they are improperly designed and priced; they will flourish if done right.
There is simply nothing inherently wrong with the concept of subscriptions and rentals; folks routinely spend a hundred bucks a month renting entertainment; they just don't stop to think about it in those terms.
But when you go to a movie theater, you're not buying the movie, you're renting the seat for a couple hours.
The same when you go to a night club or bar.
(And no, I'm not talking about the beer.) :twisted:
Ditto for cable TV services.
That is a rental business; you don't get to own anything.

Buy or rent is just another of life's daily value judgment calls we all face.
Real world data makes it clear that the average american consumer sees nothing wrong in renting; whether it be cars, houses, furniture, or entertainment.
Everybody rents at one time or another; given the right value proposition, everybody will.
It is up to Virgin and Napster to figure out what the proposition is.

[Mojo Jojo]

I think with satellite and cable TV your always getting new stuff however so a monthly rate is more acceptable.

If however you like: The Beatles, Smash Mouth, Fiona Apple, U2, Led Zepplin, Areosmith, Barenaked ladies.. uh... okay so just list out the bands you listen to and number how many are still making new releases, how long between releases, and now factor how much your paying between months when they are not.

That is all I am saying. I agree that some people will love a subscription based service. I just don't see them doing as well. Thats all, just my opinion.

[Jason Dunn]

I second that. Renting music is a terrable idea.

&lt;shrug> Why all the vitrol about subscription services? I don't see this much anger directed towards Netflicks or any other DVD rental service - how is that any different that what's happening with music subscriptions? I have a Napster subscription, and while I'm somewhat displeased with their lack of selection in some ways, when I consider the fact that I can get access to a huge amount of music for only $9.95 a month, the cost of buying 10 tracks, I see that as a good deal.

The ecosystem for supporting music subscriptions is still weak - the devices need to proliferate more, but mark my words: subscriptions will be much more popular in 12 to 24 months.

[Jason Dunn]

My reasoning is tied to my experience and other peoples experience with Netflix. Before we go down the road of movies versus music and replayability, my belief in their failure has more to do with the rate of new releases. Let me explain.

I can see a lot of truth in your example, but for me it's exactly the opposite - I have a wide range of taste in both music and movies, so my Zip rental list is always at 100+. With music I admit I have to stretch myself a little more to take advantage of my subscription, but I've found some really great stuff.

Perhaps that's the line of demarkation amongst the people who will/won't buy subscription services: people with narrow musical tastes won't be able to take full advantage of it.

[dean_shan]

&lt;shrug> Why all the vitrol about subscription services? I don't see this much anger directed towards Netflicks or any other DVD rental service - how is that any different that what's happening with music subscriptions? .

Movies are different. Most of the time you are fine watching just once. With music I like to be able to listen to it again. Maybe not the next day but in a month or even a year later. I like to be able to show others song sthat I really like when ever I want.

[Mojo Jojo]

People with narrow musical tastes won't be able to take full advantage of it.

Agreed. :D To polish that slightly, throw in the cost factor and you get down to a somewhat basic equation.

If the number of new music tracks per month multipled by a typical download ownership cost is less then or equal to the monthly subscription cost in question (with the assumption that music procurement is linnear over time) then the decision to subscribe is poor in the immediate state.

Now throw in four other factors such as cost over time, music preference over time, technology divergence over time, and provider ability over time.

If my music selection becomes or is stagnant the cost over time is a linner increase proportional to the cost of subscription. That is buy it once and own it, or subscribe and pay the monthly fee over and over. Instead of the song costing .99 cents at a one time purchase price, you pay for the same song over and over again for the length of time you own it. A simple example would be owning ten songs, $9.99 for purchasing once, or the same ten songs over a years time with a month subscription of $7.99 for a total cost over time at $95.88. For value of dollar you music library must grow in proportion to the cost of subscription.

Music preference over time also must be constantly expanding to continue achieving the value of your subscription. Using my grandmother for this one I can tell you her music expansion stopped in the late 60's, she won't be listening to Radio Head.

The next two go hand in hand and in some ways favors subscription based service. Both the company and their DRM need to stay within a favored status amongst users. If the DRM is not widely used and begins to faulter the subscription company could see less new income and reach a point where they can no longer provide service, thus a loss of music. A subscription based service however can re-encode the music to a NEW DRM with no additional cost to you (except for new player) and you get all your music back, if the company goes out of business however you lose everything.

With that being said over time the cost to subscribe may still be more expensive then to repurchase the music in a new format.

Thats how I see it. :D