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MP3’s With Your Happy Meal?

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An interesting take on the “music as utility” model from Greg Blonder:

    In the late 1800s, when a tenant sought to warm a cold apartment, she had to buy her own coal from passing coal wagons and then haul it in coal buckets up to her fourth-floor kitchen. This apparently straightforward transaction brought with it considerable challenges for wagon drivers.

    Theft was endemic. Stories abound of coal wagons stripped of half their load by street urchins before a first delivery could be made. Various solutions to improve security were proposed, including various patented coal locks. The ultimate solution, however, proved to be something quite different: a new distribution model that made coal theft irrelevant. It was called central heating.

    Coal distributors sold their product efficiently in one large delivery to apartment landlords, at the same time removing the incentive for individual tenants to steal. Landlords could pass a significant part of the savings on to tenants in their bill for monthly rent. Everyone benefited, even the families of the coal-stealing urchins.

    Similarly, it is the power of low-cost distribution, combined with subsidized free services, that will save and transform the music business. Stealing will become equally irrelevant.

    ….With these economics, distributing music on flashy plastic disks one album at a time seems, well, like heating your kitchen with coal. And $250 is not too high a price for a marketer–even those outside the music business–to spend acquiring customers, especially those dedicated fans holding an ad-supported player in their hand 15 hours a day.

    Imagine the possibilities. Buy a new Kia? Get 1,000 albums with every car. Purchase a lifetime subscription to the Boston Symphony Orchestra? Receive an MP3 player with a library of the world’s 2,000 most important classical music selections. Sign up for a new cellular contract? Get unlimited access to music from over 30,000 indie bands.

    The economics are such that it would take only one leading company to break the music distribution mold. Among MP3 player makers, Apple Computer, with its pioneering iPod and remnant counter-culture customers, is one possibility. Sony–rumored to earn more from player hardware than from its own music division–is another. Or it might be a local brand in China, with less to lose.

This uses some of the same logic as the “compusory license” model, but in this case the funds come from corporate sponsors rather than a government-mandated fee paid by consumers.

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About Eric Olsen