The the all-you-can-eat subscription model — most prominently pushed of late by Napster with their Napster to Go service (all you can rent for $15 a month) — is not yet catching on, according to market research firm Parks Associates:
- Respondents in the recent Parks Associates survey Global Digital Living strongly favored the single-track purchase model over a subscription when presented with both options. Roughly 40% said they were likely to buy songs one at a time, but only 8% were likely to use a subscription service.
“The market has a long way to go in promoting subscription models,” said John Barrett, director of research at Parks Associates. “There is hope Microsoft’s Janus technology will boost the digital music market by enabling portability and greater integration of hardware and content. However, our data show the industry needs to translate these solutions into something more tangible and desirable to consumers. At present, consumers either do not fully grasp the value of a subscription ‘all-you-can-eat’ service, or they simply don’t want it.”
For high-volume music consumers — such as myself — the subscription model would seem to make the most sense, but not with all the restrictions and compatibility issues Rob Pegoraro lays bare in his Napster to Go review:
- In its “Do the math” ads, Napster asks customers to focus on the front end of this deal. Open an account, enter your billing info and start downloading. Don’t stop until your hard drive is full, and you’ll still have paid just $15. At any other music-download site, let alone a CD store, you’d have paid thousands of dollars for the privilege.
….Because this underlying software is so new, Napster To Go is the least compatible music store in existence. You can use it only on a Windows XP computer running Windows Media Player 10, and you can transfer your downloads only to a Windows Media-compatible player that includes special software and circuitry to enforce the pay-to-play deal.
So not only do these downloads not play on any iPod, they also don’t work on most non-Apple players. Napster’s site (www.napster.com) lists a total of nine compatible devices, seven of which need software updates. Microsoft suggests that others should work, including the latest Pocket PC handhelds from Dell and Hewlett-Packard, but Napster says it hasn’t tested them yet.
….Aside from the pay-to-listen requirement, Napster To Go songs can be stored on only three computers and three music players at a time, and they can’t be burned to CD at all. [Washington Post]
Pegoraro will be hosting an online chat on the subject today at 2pm ET – could well be worth checking out.
My own thoughts are that I am not particularly concerned about the cost — $15 a month for all you can rent doesn’t seem out of line to me — but the compatibility/portability issues are the deal-killer for me.
Meanwhile, will digital music replace CDs? Five years, no. Ten years, maybe so:
- “The new format is no format,” predicted Petersen, a 24-year industry veteran who also owns a record label, a recording studio and a music-publishing company. “What the consumer would buy is a data file, and you could create whatever you need. If you want to make an MP3, you make an MP3. If you want a DVD-Audio surround disc, you make that.”
“We’re moving beyond the media stage to the delivery stage,” agreed Mitch Gallagher, 41-year-old editor of EQ, a San Mateo, Calif.-based magazine for music producers. At some point, he said, “you won’t have something to hold in your hand” until you transfer a data file to a blank disc or tape.
“We can make our own plastic,” Petersen said. “I’ve been thinking this is what should happen for years, but it’s actually the way we’re going anyway.”
….Record executives devote a lot of thought to the future of the product they’ve long manufactured. “Five years from now, absolutely there will be CDs. Ten years from now, though, there will be fewer,” compared with other digital music options, said Larry Miller, the 47-year-old CEO of the Or Music label, a Sony Corp. offshoot that gained notoriety this year for its biggest act, Los Lonely Boys, the Tex-Mex trio nominated for four Grammys. “As far as another [physical format], if it exists, I haven’t heard about it. . . . When I look three to five years in the future, I believe that 20 to 25 percent of music purchased will be downloaded.”
….The compact disc has had a great run — developed by Philips and Sony in 1979, introduced to the United States in the spring of 1983, 1 billion in world sales by 1990. And it’s still going strong.
According to Nielsen SoundScan, which keeps official tabs on point-of-purchase sales of recorded music, 2004 was a comeback year for the CD. Sales of CD albums, which make up 98 percent of all album sales, were up 2.3 percent compared with 2003.
….”I think CDs are going to be around for a long time,” said Petersen. “The cassette was a silly format. It was never designed to be a high-fidelity format. Plus like LPs, you had to flip the media over halfway through. Music buyers are still replacing all their favorite albums on CD.”
….During the second half of 2004, more than 91 million digital tracks — songs downloaded from the Internet — were sold, compared with 19.2 million in the same period in 2003. That’s an increase of 376 percent.
More than 140 million digital tracks were purchased during 2004. Plus in the last week of 2004, digital track sales hit a record 6.7 million.
Apple Computer Inc. CEO Steve Jobs has seen his company’s iPod digital music player, which starts at $250, sell more than 10 million units since 2001 — and 8.2 million in 2004 alone. The iPod, no bigger than a pack of cigarettes, can hold up to 10,000 songs. Apple also recently released the iPod Shuffle, a less pricey (starting at $99) and less capacious version of the iPod; sales have been brisk. Pepsi is now giving away songs on the iTunes Music Store — the online site where iPod users can plug in and download.
….In the “no format” future, Petersen added, record stores, in order to better serve consumers who might not have all the technology at home, should burn CDs for customers and offer high-resolution graphics for a jewel case.
Liner notes and album art will be downloadable, too.
….The good news for curmudgeonly souls unwilling to embrace a brave new world is that there will probably always be something “physical” to stuff in their purses, even if they have to make it themselves.
“I think there will always be a market for the physical product,” said Steve Blatter, 38-year-old vice president of music programming for Sirius Satellite Radio, a company that intends to thrive on the consumer’s desire to customize musical options. “If you just want to listen to music on your computer, think about what you have to go through to listen to that Ashlee Simpson song.
“There is a simplicity to the CD player.” [Washington Post]