19 January 2006

Music Labels...again...

Two interesting news stories today on digital music:

First from MacWorld about growth in digital downloads last year. Apparently downloads TRIPLED last year to a value of $1.1bn. Again this is trumpeted as positive. However, as I pointed out a week or so ago in this post, I don't think this is at all impressive. During the last year, we've had a doubling in the number of tracks available for download (to 2 million apparently). In addition, we've had growth in the number of countries with online music stores. When added to the growth in broadband users, and the growth of people with MP3 players (number of iPods in use tripled last year), I think a tripling of digital downloads represents a very poor result indeed.

Aside - read the rest of the MacWorld article for a ridiculous view spouted by John Kennedy IFPI Chairman and CEO claiming that ISP's have a responsibility back to the music labels. What planet is he on?

Next up is this report from Reuters on Universal going back through its archives and making 100,000 recordings available for download only. Many of these have never been available in any format except vinyl. This seems like a good thing, surely? Yes, I think it is. But surely it shows how profitable the digital market is? This will be a costly exercise indeed, yet will payback from just the comparatively small number of people who are paying for digital music online. I've always maintained this long-tail economics is a great advantage for digital music economics. But, if Universal can do this, could they not also reduce the price for older recordings which ARE already available digitally? There are NO additional costs for them - it's already done, yet opportunities for sales are being missed and artists are going unrewarded.

And before you blame Apple for its (supposed) intransigence on adopting variable pricing, remember that the labels would be free to do this with any other music store. But they haven't. As I've pointed out before, in the minds of the music labels, variable pricing is only variable from a baseline they think they've set with Apple - it's a one-way upward revision to the more popular stuff. The consumer should be under no illusion that they will benefit.

Universal's move is indeed to be welcomed, but until they recognise that it is in everyone's interest to lower prices of online music - so that consumers benefit from some of the economies, I feel we will continue to see online music being an underdeveloped proposition. And as long as industry executives like John Kennedy (and countless others from RIAA, SonyBMG, Warner, etc) spout the nonsense they do, is a further indication why it will remain so.

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