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I will be presenting my thoughts on the digital music flat-rate in a session at Midemnet 2009, and so I thought it may be a good idea to give you a heads-up on what’s coming. Many of you may of course know my work from the past 10 years and that the flat rate for digital music aka Music Like Water has always been a crucial cornerstone of my concepts for the Future of the Music Industry.

First, it is really great to see that indeed, music flat rates are being considered, planned and tried literally everywhere – here are some examples, and the models that go with it.

  • Google is offering free music in China, via their partnership with Top100.cn. This offering covers mostly Chinese music at this time, I think, but if you’re logged-in you will get free on-demand streams (and MP3 downloads, I think – can’t access it from here). Google pays license fees for the music and in return gets to sell more and better ads – plus, if this can be expanded to all music and other media, as well, Google may eventually be able to actually compete with Baidu (which is crucial for them). The model: your attention pays for the Content; i.e. Google pays the license fees (it’s a split of revenues I would guess). The traffic & attention pays for the music -sounds familiar?
  • Orange’s Musique Max, in France (*a client of mine) now offers a flat rate for digital music to their French mobile customers, as well. Unlimited downloads to mobile and PC, for 12 Euro per month (see this press release by France Telecom). The catch is, of course, both the DRM (yes… still…ouch), and the price, and the data costs – but all 3 of those will certainly be addressed in the near future I would hope.

TDC in Denmark: buy Internet access from them, and get the music ‘for free’. Same issue with the DRM but the bundle certainly is a good concept. The model: Music is a substantial added value – the cross subsidy model that Long Tail-Chris Anderson talks about a lot. Playlouder in the UK has a similar model of bundled, all-you-can-eat access.

Nokia comes with Music (*disclosure: Nokia is a think-tank client of mine) : the latest offering by mobile device & soon-to-be Internet giant Nokia, bundling music from all 4 majors and an increasing number of independents into the purchase of the handset. Buy the Nokia music phone, and all the music is yours (yes, their are some catches but …it’s a great start). The model: a 3 party pays to promote another offering (i.e. the music is free for the user!) Sony-Ericsson pulled a similar rabbit out of their Swedish hats, just a few weeks ago, with their Play-Now-Plus service that was launched in Sweden. What about Samsung? Stay tuned…

The German magazine Focus reports that mobile operator T-Mobile wants to offer a Music Flat Rate, as well. Clearly, operators and telecoms are going to be entering the content distribution and service business much more seriously than ever before – they have no choice. A rather funny google-auto-translated English version of the Focus article here, original German version here.

Billboard.biz recently reported on Norway’s Netcom launching an unlimited music offering, as well (albeit only with 50k tracks provided by UMG – hardly a convincing argument for the digital natives I would guess but … baby steps are better than none)

Swedish performing rights society STIM (also presenting at MidemNet) has been busy pushing things forward in the same direction.

Over in the newly re-inspired lands of Obama and Change.gov, my dear friend Jim Griffin has been trying to steer the Warner Music Group ship into the music-flat rate direction – and I would guess we will hear more from him at MIDEM, hopefully!

There are many more examples but hey – this is blog post, after all, not a Music 3.0 book (yet). But the bottom line is this:

  • The flat rate for music is a certainty and we will see it become a reality in the next 2 years, so… get ready
  • New business models that are based on attention-revenues not copy-revenues must be developed asap – and this is not an easy mission during these times of transition
  • The artists and their managers, the traditional master recording rights holders and composers and publishers, as well as the many organizations that represent them must collaborate much more in-depth than ever before – and most likely the master and composition rights societies will need to actually merge to make this work

But I don’t want to jump the gun here – all of this will be part of my presentation at MidemNet. Look forward to seeing you there!

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4 Comments

  1. Hi Gerd,
    Looking forward to seeing you in France.
    I actually don’t agree that flat-rate is the best route to “music like water”.
    IMHO, “like water” should describe the barrier of entry for innovators to have access to the media, but the market should determine pricing.
    A digital repository where copyright holders can place their content, set their own pricing and business rules, and allow anyone willing to play by those business rules access to the content is what is needed.
    Unfortunately, no one is building it. Snocap was headed the right direction, but not really. TotalMusic could have been the industry version of this, their Visa International of rights.
    Personally I am no longer hopeful companies with large catalogs of music will open their catalogs to innovation in a sane way. I think too many bad decisions and very little meaningful technology has been made and built over the past fifteen years.
    While I see the obvious value to innovators and consumers (assuming the price is something reasonable), I don’t think widespread commoditization of music is the answer to monetization for artists. When the first artist receives a meaningful check from Nokia Comes With Music, give me a ring.
    Looking forward to debating this in France!
    😉
    ian

  2. Dear Ian, yes, look forward to our discussions at MIDEM. 2 points today, though.
    A) the music market IS already certified dysfunctional and therefore there is little hope in ‘the market working out the rates’ – unless you define the new markets as those run by all the new players (which does not seem realistic). As long as there is no incentive to make their catalogs available to everyone, with reasonable terms, most of the major rights-holders will likely continue their strategy of ignoring / refusal / stone-walling, thereby forcing users into illegality and startups into submission or financial nightmares (or both). We need digital music to be regulated just like RADIO, with a license that is available to everyone that wants it; be it a voluntary collective or a compulsory (and initially, by territory) 2) The flat rate will NOT lead to widespread commoditization – that did not happen with Radio, either! It will lead to build-remuneration based on share of attention – and that, to me, seems like the best way to pay the creators. More soon!!! Thanks for commenting here. Cheers, Gerd Leonhard http://www.mediafuturist.com

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