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Paul Brindley, MD, Music Ally

2008 is going to be a hugely tough year for the rental music subscription business. The announcement from Nokia that it has been able to secure a deal to allow unlimited permanent downloads which will be bundled along with its devices free for 12 months will exert huge pressure on the rental model offered by the likes of Napster and Rhapsody.

But it’s not as if the pressures weren’t already intense enough. Consumer research (including our own research) constantly shows that the lack of ownership offered by rental models is one of the biggest barriers to a business model which was supposed to be a future saviour of the recorded music business. Then there’s the basic lack of consumer awareness and understanding of just how a rental music model is supposed to work or how the technology is supposed to work. The model depends on DRM to work but the DRM rental technology is notoriously clunky and these days DRM is increasingly out of favour with all labels, including the majors.

The subscription business already has the unfortunate claim that its percentage share of digital income already went down from 7% in 2005 to 6% in 2006 so it’ll be interesting to see how subscription fares in IFPI’s report for 2007 which is due to be released at Midem.

Now comes the news that Napster is putting its basic price up from $9.95 to $12.95 a month, an even more offputting move for new customers. At the same time more companies like SpiralFrog et al are seeking to offer a rental subscription service for free, and supported by advertising income.

So could 2008 be the end of the road for the paid for rental subscriptions? Quite possibly. The trend is now for download to own models like the new Nokia offering (and the existing eMusic model), away from DRM, and towards free rather than fee.


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About Author

James Martin

James Martin is Head of Social Media for Midem organisers Reed MIDEM. This includes defining and rolling out Midem's social media strategy, editing midemblog, influencer outreach, developing Midem's fanbase of 75,000+ music professionals and more.

1 Comment

  1. I agree with Paul’s comments to a certain degree: there are significant challenges and customer negatives associated with a susbcription model which most insight in this space has uncovered.
    These include:
    -customer unease with the lack of “ownership” of the music
    -the need for the service to be renewed each month
    -the use of DRM to ensure the content is tied to the devices in the individual customer’s domain
    Some of these will remain in All You Can Keep model. However, by far the most important element, which hasn’t really figured in so far, is discovery.
    A rental or permanent download model will only be useful to the customer if they are getting lasting value from the service.
    If the customer pays, then there has to be an obvious benefit for the monthly / weekly spend. That equation will be in constant review each time the fee is applied.
    If a consumer brand is paying, then they too must ensure the customer is gaining value from the service. This value should translate into customer loyalty and theoretically retention.
    In either case, the service must bring value through the whole 12 months, not just the initial honeymoon period. That requires the service to provide constant stimulus to discover new music, or rediscover /recontextualise music the customer already knows.
    That requires strong powerful stimulus to usage, which will in turn require a variety of tools, involving editorial, personal and other recommendations.
    2008 is the year when we get the access problem solved. The next horizon – and the key to sustainability of all business models the industry is considering – is discovery.

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