Digital media downloads – where’s the consumer dollar?
Concerts, CDs, minidiscs, DVDs -- they’re all media, they’re alloffline, they all make money. But what’s happened online? While thereare a million models for charging access to MP3s, Realplayer/Windowsmedia videos and online concerts, they’ve failed to deliver serious cash yet.
Is this because online suppliers refuse to acknowledge just how ropeytheir product quality is? Take Elton John’s concert. While aninteresting attempt to break the mould, watching the pinball wizard bash out his numbers on a fag-packet-sized screen is not the same as going to Wembley Stadium. So why did they cost the same, and what are we going to do about it?
Although the online MP3 download service Napster has received much flack from the recording industry, user numbers before the ‘closure’ court ruling were large enough to make the industry sit up and take notice -- even though the content was free. The UK's Association of Independent Music (AIM) and the Independent Music Companies Association (IMCA) recently signed a worldwide licensing deal with Napster, bringing music from more than 150 record companies into the Napster fold (around 20% of the European music market).
This indie deal is the latest play by Napster to remain afloat, following an earlier US court ruling ordering it to cease allowing users to download pirated tunes. The central condition of the deal is that Napster switches to a subscription model -- something that its users seem unwilling to embrace as they leave the service in droves. The company claims over a million people have signed up to participate in trials of the new service, however.
UK-based online music distribution service Wippit is due to launch in a month or so, and plans to take advantage of the furore over Napster. Wippit’s subscription will be about £50 for a year of unlimited downloads. According to the company, 20,000 downloads of the beta software have been made so far -- an excitable market segment.
Paul Myers, Wippit chief executive said: ‘Everyone is looking at getting cash out of this market -- for obvious reasons -- but there are a lot of payment models that just won’t work. Micropayments just won’t fit the bill, in my opinion -- people want to know what they’re paying for, and it’s got to be transparent.’
A case in point is London-hosted iCrunch, an MP3 download service recently bought by Music Choice, that charges 99p per file. Although this provisonally makes 12 tracks 12 quid (roughly a CDs content and cost), users will not have the physical sensation of purchasing anything. This is a huge problem, according to industry commentators, who point to the lack of uptake of VOD services in the US being due to the same perception problem.
These issues have been commercially highlighted again when the high profile Elton John concert, plugged by MSN et al, seemed to crash in flames. In fairness, viewer figures are not yet available, but the prevarication of the companies involved points to a less-than-impressive sheet. Industry doubts about the audience, the material and, above all, the £7-10 viewing fee have lowered performance expectations. As one analyst said: ‘Why would anyone pay the price of a CD to hear Elton John live through their PC once?’
This is also the problem Myers points out: MP3 players are not yet found in cars or living rooms as standard, although around 80% of music that is bought through any medium is listened to in these places. ‘When this happens, things are gonna get really good -- Renault has already produced a car with MP3 in it as standard, but only for the Italian market. Also, when we’ve got GPRS-enabled PDAs, that should be exciting – a kind of digital always-online walkman with all the content in the world on it!’
If such devices take off, it will bring the convergence of on and offline music to a point where it can be appreciated. At the moment, MP3 and minidisc are the only realistic flexible options, and neither are particularly interchangeable or user friendly. We know they can be, but anyone trying to transfer file formats needs a lot of spare time and patience -- something less and less unlikely in today’s ‘cash-rich time-poor’ society.
Myers reckons that these innovations will be with us by the beginning of next year. As many of the technical pieces are already in place, it seems to be simply a matter of customer demand -- lets hope consumers shout loud enough.