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Music: Rent versus Own

Posted By Barry Ritholtz On July 19, 2004 @ 7:04 am In Music | Comments Disabled

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The WSJ “Real Time [1]” column raises an interesting question this morning — the query they raise is at the heart of what some in the Music industry believe will solve all of their problems: Will renting songs ever win over digital-music fans?

I suspect the issue is a non-starter — not due to consumer demand, but rather, because artists have learned the harsh lesson that the labels cannot be trusted — period. Given the industry’s historic loathing of actually compensating their artists fairly, I cannot imagine that any musician would ever in a million years agree to the sort of compensation arrangement that a renting/all you can listen to/flat fee subscription plan would entail.

That’s what happens after many decades of accounting malfeasance (see “RIAA accounting practices a leading cause of declining music sales [2]), and even outright theft (See: “Spitzer tells Music Biz: Stop Robbing Artists [3]) by the labels against their artists; The books “Stiffed [4]” and Hit Men [5] outline many of the sordid details.

It turns out that generally loathsome behavior on the part of the industry for decades does have consequences. I hope that whatever replaces the big labels is less abhorrent . . .

An excerpt from the Journal piece follows:

“Will digital-music fans ever warm to the idea of renting their favorites?

That’s a key question in the industry, with Microsoft Corp. about to release a new version of its “Janus” software for preventing music piracy that will let subscribers to services such as RealNetworks Inc.’ Rhapsody transfer songs to their portable audio players.

Allowing transfers could address one of the biggest limitations of the subscription model, if enough of the record labels sign on to give the concept a chance. But would it be enough to make the subscription model better-known and more widely adopted?

First things first: The fundamental difference between a subscription service such as Rhapsody and “a la carte” services like Apple Computer Inc.’s iTunes Music Store, the reborn Napster and MusicMatch Downloads is that subscription services let you browse and listen to hundreds of thousands of albums for a monthly fee, but the songs are “streamed” to your PC instead of being downloaded permanently to your hard drive or burned to a CD — stop subscribing and they vanish. With iTunes and its ilk, you can only preview snippets of tracks, but there’s no subscription fee and if you pay your dollar, your download is yours for keeps.

The subscriber model lacks both respect and exposure. Come-ons for song downloads are such TV staples these days that it seems like you’d have trouble buying a beer, soda or burger without getting a digital song, and Apple reaped a PR bonanza with the countdown to its 100 millionth downloaded song.

Meanwhile, subscription services are widely seen as also-rans. Part of this, one suspects, is that “streaming” is still a dirty word to a lot of Internet users, who associate it with stuttering or stalled audio. Subscription services also should engage in some remedial PR — the business model is sometimes referred to as “music rental,” which at best seems slightly pejorative to music fans used to extracting physical CDs from shrink-wrap and at worst smacks of paying through the nose to have a couch to sit on.

Still, the subscription model does have undeniable drawbacks. One of the biggest is that transferring songs to a portable player forces users to either go through a considerable amount of legal hassle (pay an additional fee and baby-sit burning songs to a CD, “rip” the CD back into permanent digital files, then transfer the songs) or engage in illegal activity to capture streamed songs. The new version of Janus could largely eliminate such annoyances. But would the payoff be a new lease on life for the subscription model?”

Source
Will Music Fans Ever Warm To ‘Renting’ Their Favorites? [1]
Tim Hanrahan and Jason Fry
WSJ, July


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URL to article: http://www.ritholtz.com/blog/2004/07/music-rent-versus-own/

URLs in this post:

[1] Real Time: http://online.wsj.com/article_print/0,,SB109000191810566050,00.html

[2] RIAA accounting practices a leading cause of declining music sales: http://www.siliconvalley.com/mld/siliconvalley/business/columnists/gmsv/8667970.htm

[3] Spitzer tells Music Biz: Stop Robbing Artists: http://bigpicture.typepad.com/comments/2004/05/spitzer_tells_m.html

[4] Stiffed: http://www.amazon.com/exec/obidos/ASIN/0060167459/ref=ase_thebigpictu09-20/104-2901763-1119913

[5] Hit Men: http://www.amazon.com/exec/obidos/tg/detail/ /0679730613/ref=ase_thebigpictu09-20/104-2901763 1119913?v=glance&s=books

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