The Media Technology Research Group of Sweden has published a fascinating study on "Usability Factors in Digital Music Distribution Services and Their Relationships with Established and New Value Chains in the Music Industry." The name is unwieldy, but the research is powerful:
- This report has evaluated the available digital music distribution services over a longer period, and analysed the underlying rules, mechanisms, theories and opinions within the music industry to find what factors are essential for a commercially successful service.
The music industry has now acknowledged digital music distribution services as a new channel, but there is still no successful commercial service today. Commercial services are competing with P2P services that offer a wide diversity of music at a minimal cost for consumers and there is a great need for the industry to find a commercial alternative that consumers will accept.
A number of factors important for a successful service have been identified. These include a relevant music selection, availability virtually as conveniently as unprotected files, usability in the form of a good search tool and logical categorisation, as well as an efficient revenue control utilising alternative revenue channels. Other important factors are copyright rules that need to be revised to become more globally coherent. The industry also needs to develop a working copy protection system that does not impose too many limitations for consumers without losing the ability to generate revenue for content owners. New pricing models are needed for consumers to accept payments for music files, and subscriptions or eventually an indirect payment method seems to be the best solution.
Digital music distribution promotes diversity in music genres and services, and ventures with superstars will be riskier and less lucrative in an uncontrolled music environment. There are a limited number of different customer groups, and services should focus on groups interested in a more diverse market offering. At the moment only P2P services offer such diversity.
Up to now, music industry strategy towards file sharing and services such as Napster and Kazaa has been counterproductive. The notion that downloading is free (and therefore involves consumers stealing from artists and record companies) is far from correct. The annual estimated spend by consumers on downloading, in the form of fees to telecom firms and ISPs far exceeds estimates of the record industry’s net annual revenue (income - costs).