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.