Connected Home: "Subscriptions Are the Future of Digital-Media Delivery"

[Jason Dunn]

<div class='os_post_top_link'><a href='http://www.connectedhomemag.com/Audio/Articles/Index.cfm?ArticleID=42354' target='_blank'>http://www.connectedhomemag.com/Audio/Articles/Index.cfm?ArticleID=42354</a><br /><br /></div>"I've purchased more than 250 songs from Apple Computer's iTunes Music Store and probably a few dozen more at other online music stores such as BuyMusic.com, Musicmatch Downloads, Napster, and the RealPlayer Music Store. But these pay-per-play music stores are obviously a passing fad, and the future of online content delivery clearly has nothing to do with ownership of music. We'll soon look back on services such the iTunes Music Store and shake our heads, as we probably do today when discussing black-and-white TV or 8-track cassettes. <br /><br />Although 99 cents might seem like a reasonable price for one song, it's expensive when you consider the capacity of a 20GB Apple iPod, Dell Digital Jukebox (DJ), or similar portable audio player. To fill up such a device using the iTunes Music Store or a competing service, you'd spend $19,800—more money than I spent on my last car (which, incidentally, I'm still paying off). That cost puts the exorbitant price of an iPod in perspective, doesn't it?"<br /><br />I rather like that fact that Paul Thurrott isn't afraid to express a seemingly unpopular opinion! :way to go: The truth is that I can see a lot of logic in his approach - if I could get all the music I wanted for $10 USD a month, I'd sign up immediately. Who cares if I don't own it? For a meagre $120 USD a year, I'd get access to huge amounts of music that I could put on any device I wanted. I have over 500 CD (I think - I haven't counted lately!) so I consider myself serious about owning music - and I really can't see a huge downside to this. What do you think?

[Christian]

I agree that some sort of subscription model makes much more sense than buying individual songs. For one, my current MP3 collection is already at 192kbps, so I'm not really interested in buying inferior quality at $1 apiece. I would be willing to pay $10 per month to listen to lower quality music today if I could effectively "upgrade" it as technology progressed later.

Subscription services also make much more sense for people like me who don't have large CD collections. For me, iTunes would require a vast initial investment to build up a collection compared to a monthly fee.

[Jason Dunn]

I'm not sure why exactly, but I'm starting to get over my need to own everything. I'm buying less DVDs than I used to, because it finally dawned on me that in order to financially justify the purchase of a DVD vs. just renting it, I would need to watch it roughly four to five times (DVDs here are about $20 to $25 CND, rental costs about $5 CND). I can count the number of DVDs that I've watched four to five times. Same thing for CDs - there are so many that I've listened to a few times, then it gets put back on the shelf...and I don't even queue it up in WMP to listen to...

[James Fee]

Part of me likes the fact that I actually own the music, BUT it would be nice to access the entire catalog anywhere I am. For now iTunes will work, but I do see the point of spending tons of money on songs when a subscription

[Zack Mahdavi]

I don't think renting music is such a bad idea, as long as there are no restrictions... for example, it would stink if you could only "check out" 50 songs at a time, or if you have to pay a separate fee for each device you own.

Besides that, I don't see a downside to a subscription service.

[Phoenix]

I have quite a few thoughts about this... I'm going to be presenting two sides of the coin in my comments - why I think renting music won't "win the war", and how I think it might work, so keep that in mind as you read.



Now although I can keep an open mind about the possibility of a service that would ask someone to pay, say, $10/mo. to have access to as much music as they wanted - a service that would allow them to load or stream the music onto any device they wanted to (PPC, Digital Music Player, etc), and that the "renting music" business model could be a good thing, even if it meant that the ownership aspect would be taken out of the equation, how "good" it might be would absolutely depend on some things...

First, there would have to be some assurance... (and this assurance would be most certainly impossible, unless I suppose Microsoft offered this service directly - it's not as though they're going out of business anytime soon)... the assurance that the companies offering such a service would be around... pretty much forever. The significance of this is that no one wants to spend years shelling out money only to find out years down the road that the companies offering this "pay to rent" music service are no longer around, and after having spend hundreds and hundreds of dollars, as a customer, they don't own a darn thing. That's no good. That's why I've suggested before that the "pay to rent music" concept might be a service that some will subscribe to only on occasion, and beyond that, that it might be a niche market. Because there really isn't any assurance that a subscription investment will pay off down the road... sure, you had some good times listening to music, but it's years later, you don't own any of it, and you have nothing to show for it. This factor alone could keep the vast majority of people from abandoning the value of music ownership completely and embracing subscription services entirely. I've come to realize that subscription services may supplement music ownership, but it would not replace it, unless certain things were in place (which I mention later). And unless these certain conditions are met, people won't treat music like a revolving service such as electricity, water, internet access, or cable TV. Utilities and services like those are necessary things that people need to stay alive, communicate, and stay current on what's happening around the world. Music, although important to many of us, is a luxury, not a necessity, so the masses, I don't believe will abandon purchasing and owning music in favor of adopting the idea of paying a revolving fee each and every month for the rest of their lives - once again, at least not without certain things in place. I think people need to consider the possiblity of a coexistence of both music ownership and rental services, with ownership being the the most popular choice - at least for a good while.

Now although you can debate the value of music ownership by calculating how much music people would have to spend to fill up an Ipod, you have to remember, first of all, no one has to fill up an Ipod (it has far more room than anyone would ever need, anyway), and secondly, large amounts of money spent on music is spent over the course of a lifetime, not all at once or in a single year. And most individuals and even entire families (and I say and believe "most", not all) wouldn't and don't spend that much on CD's or downloadable music anyway - in part because they can't afford it, hence all of the illegal downloading, for example. But that doesn't mean that they can't and don't continue to buy more music here and there and remain satisfied. Now, 500 CD's worth of music is a massive collection by anyone's definition, except for maybe a record store. Most people will live their entire lives content without ever having listened to that much music, yet alone having owned it. So, although the concept of how much it would take to fill up an Ipod is an entertaining bit of trivia, it's not realistic, it never was, and it's nobody's burden. Besides, once you own the music, you own it. You don't have to buy it again, and you can do with it as you please for the rest of your life. All people have to do is continue to purchase music as they currently do and at whatever rate they do, and as their collection grows, they'll have access to this music for as long as they live and as often as they want, and they'll be able to rip, burn, and encode however they please and to whatever device they want. There's equity there and control.

The second thing that would have to be present in order to make renting music worth it over ownership, is the collection would have to be absolutely enormous. Companies would have to offer the public a collection that was as deep as it was wide. The "Jukebox in the Sky" if you will. Otherwise, what's the point? And where would the value be? I can go out and not only buy virtually any CD ever made, but own it, too! Ownership, meaning there's equity found there in my favor. If I don't have that kind of a selection when renting music, then why would I put money into a companies pocket just so that I could access some paltry collection of music and provide myself with no equity and less control? That wouldn't be worth it.

The third thing that would need to be available to make renting music worth it, is there would need to be an easy way for people to transport and access the music from one device to the next - handheld player, to car stereo, to home stereo, to boombox, to work computer, and without a lot of fuss. If renting music would be designed to mostly replace peoples' desires to buy and own downloadable music that they could load onto many devices, or to buy and own CD's that very easily play on many devices, then renting music would need to offer a similar ease of transport and access. Otherwise, this service will be a niche and won't generate a strong response. Some people might say that you could burn the music you rent onto a CD and transport it that way, but I don't think rented music could be burned in the first place. How would a CD player know how many days you played a particular CD that you burned and know when to stop to playing it, until you renewed your subscription? A computer might be able to figure that out under specific conditions, but not a CD player, and so the companies renting music probably would devise things so that CD's couldn't be burned in the first place, otherwise, people would own the music. Renting music, although different from services like satellite radio, should be as easy and as accessible as satellite radio. Renting music would be an on demand service, so people would have higher expectations and rightly so, hence the requirement for a way of easily transporting and accessing music from one device to another. If there was someway of accessing rented music by means of satellite, for instance, in addition to the ability of downloading to a computer, this, IMO, would ultimately be the best method of offering rentable music to the masses. That way, no matter if someone was in their car, near their home stereo, at work, or on the beach with a boombox of some sort, or at their computers uploading music to their Ipods, they could access their music, either by cable internet or satellite, depending on whether they were out and about or stationary. In other words, renting music might be a great way to go, but customers would have to have access to it no matter where they were and no matter what device they were using. Otherwise, customers won't consider it a must have service. It would just turn into a hassle.

Which leads me to the fourth thing, which is that rentable music would have to be streamable, not just downloadable.

Fifth, for flexible access to this music, automobiles, laptops, and portable players/receivers, would have to be equipped to receive on demand streaming satellite transmissions, and/or have the ability to access the online rentable music stores via the internet and WiFi. Most people don't and won't want to hook up their computers to their home stereos - it's too complicated for most and they don't want to fiddle with all of that or access music from their computers which will treat their stereos as little more than a dummy box in the effort to pump music through the stereo's speakers. Not to mention, people don't want to interface with a computer, wait for it to boot up and so forth, fiddle with a keyboard and mouse, just to listen to some music. Imagine if you had to use your laptop everytime you wanted to listen to music through your car stereo - how stupid would that be? Well, that's how people feel about their home stereos. They want to leave their computers out of it. Stereos would need to have direct access to the internet via WiFi along with new and simple interfaces that would make accessing the music easy. This type of change, I believe will be necessary for all devices involved, otherwise, renting music won't be worth it to the masses - it'll be too complicated and messy... just not to the geeks who are willing to fiddle with their computers and network hardware all day. People already have a tough enough time just downloading music and uploading it to their Ipods. Can you imagine expecting the average consumer to figure out how to transport rentable music from one device to another without these things in place? It'd be a nightmare, if not impossible due to DRM issues and/or the rentable music business model, or whatever else.

Sixth, each customer could not be expected to pay for and manage more than one account. One account would need to allow each customer to access streaming/downloadable music on demand no matter where he or she was and no matter what device was being utilized.


So there. Migraine in your eyeball yet?

I've been thinking about this more, and although I'm coming around to the idea of renting music, the things I suggested would all need to be in place, IMO, before it would succeed. Turning the whole world on it's ear in terms of how it looks at and pays for accessing music is nothing less than an amazingly ambitious feat, and it will take nothing less than many serious changes for everyone to adopt it as their primary method of music acquisition and for this business model to succeed.

As I've been reasoning through what I believe are the pros and cons of it all, if I could access an exhaustive collection of streaming and downloadable, high-quality music anywhere I was, and on any device, with an easy way of accessing the online catalog from these devices, without having to pay for and manage more than one account, I would be interested and could probably overlook the idea of non-ownership. It would probably make life simpler, quite frankly, and you'd have access to any song you wanted, at any time, anywhere.

I'm just a bit doubtful that this can be pulled off anytime soon. There are quite a few pieces to this puzzle.

[Christian]

Excellent post - I agree with most of your points. However, I do believe that for some customers (like myself), an imperfect subscription service would nevertheless have strong value compared to traditional business models. I own very few audio CDs, and hence the equation amounts to either buying one new CD this month, or having access to tens of thousands of songs that I don't already own - for the same price. Granted, I would prefer to also own all that music, but what I would be willing to pay the monthly fee for is to enjoy that music in the present. If that company does go out of business ten years later, the quality of my past experience hasn't been degraded in the least.

Most of the items that I spend money on, including technology and entertainment products - not limited to services - will either be consumed, broken or outdated to the point of losing all value within the next ten years. If the company I am accustomed to renting music from goes out of business, my loss will be no less acceptable. Also keep in mind that if I switch music providers in ten years, I instantly have access to the equivalent library of music, so I've lost very little.

[Phoenix]

Excellent post - I agree with most of your points. However, I do believe that for some customers (like myself), an imperfect subscription service would nevertheless have strong value compared to traditional business models. I own very few audio CDs, and hence the equation amounts to either buying one new CD this month, or having access to tens of thousands of songs that I don't already own - for the same price. Granted, I would prefer to also own all that music, but what I would be willing to pay the monthly fee for is to enjoy that music in the present. If that company does go out of business ten years later, the quality of my past experience hasn't been degraded in the least.

Most of the items that I spend money on, including technology and entertainment products - not limited to services - will either be consumed, broken or outdated to the point of losing all value within the next ten years. If the company I am accustomed to renting music from goes out of business, my loss will be no less acceptable. Also keep in mind that if I switch music providers in ten years, I instantly have access to the equivalent library of music, so I've lost very little.

I would agree that as long as there is more than one company out there offering this service, then there would be little to worry about if one company went out of business. There would be others to turn to. If only a few companies offered this service and they all sunk, then that would perhaps be a different tune altogether (no pun intended).

Although, all things considered, with everything in place, which would require a syncronization of companies and sub-industries, all the pieces of the puzzle might end up being so entrenched and in place by that time, that once the momentum was there for this type of service, there would little or no room for concern of it ever going away - sort of like cable TV.

[Jason Dunn]

Some very interesting thoughts...I agree with most of them, except for this one:

First, there would have to be some assurance... (and this assurance would be most certainly impossible, unless I suppose Microsoft offered this service directly - it's not as though they're going out of business anytime soon)... the assurance that the companies offering such a service would be around... pretty much forever. The significance of this is that no one wants to spend years shelling out money only to find out years down the road that the companies offering this "pay to rent" music service are no longer around, and after having spend hundreds and hundreds of dollars, as a customer, they don't own a darn thing. That's no good.

If I were paying $50 a month, I would agree with you, but if we're talking about $10 a month, I honestly view it as a rental fee with no degree of ownership, closer in model to cable TV. $120 a year is only the price of six CDs, which I don't consider to be all that significant if it means I can have access to 500,000+ songs.

You're pretty much spot on about everything else though - we need a whole new breed of consumer electronics devices that will be able to tap into this music feed, which almost certainly means they'll need to be wireless. Such a thing is a decade in the making, but I think subscription music might be a driver for the new hardware.

[Phoenix]

Some very interesting thoughts...I agree with most of them, except for this one:


First, there would have to be some assurance... (and this assurance would be most certainly impossible, unless I suppose Microsoft offered this service directly - it's not as though they're going out of business anytime soon)... the assurance that the companies offering such a service would be around... pretty much forever. The significance of this is that no one wants to spend years shelling out money only to find out years down the road that the companies offering this "pay to rent" music service are no longer around, and after having spend hundreds and hundreds of dollars, as a customer, they don't own a darn thing. That's no good.

If I were paying $50 a month, I would agree with you, but if we're talking about $10 a month, I honestly view it as a rental fee with no degree of ownership, closer in model to cable TV. $120 a year is only the price of six CDs, which I don't consider to be all that significant if it means I can have access to 500,000+ songs.

You're pretty much spot on about everything else though - we need a whole new breed of consumer electronics devices that will be able to tap into this music feed, which almost certainly means they'll need to be wireless. Such a thing is a decade in the making, but I think subscription music might be a driver for the new hardware.

I can see your point. $10/mo. certainly wouldn't be something to get worked up about if these companies were to go bust, but of course we have no idea yet as to what price point a service like this would even demand, and so from that perspective, which is where I was coming from, I have to stick to my original opinion.

But I do understand what you're saying.