There's a spirited debate going on between those who think à la carte downloads are the key to music's digital future and those who see subscription services as the cure for what ails the music b
Ken Schlager is co-executive editor of Billboard.
There's a spirited debate going on between those who think à la carte downloads are the key to music's digital future and those who see subscription services as the cure for what ails the music business.
We certainly understand why the subscription concept is gaining support and why such big Web brands as Yahoo, Napster and RealNetworks are betting heavily on the model.
To this camp it looks attractive to treat music like a utility. A consumer can turn on the switch, and all the music he or she wants is there for the enjoyment -- albeit with strings (or "tethers") attached.
All the user has to do is pay one monthly fee, whether it's $9.95 for a basic subscription to Napster or RealNetworks' Rhapsody, or the aggressive $6.99 price tag that Yahoo recently pinned to its all-in service. (Yahoo's offering includes portability. That feature runs another $5 monthly at Yahoo's rivals.)
The price points look attractive -- although it's unclear whether any of the services can turn a profit with their current business models.
But we think the conversation misses the point. Music subscription services will not be primarily competing with each other or with à la carte download sites like iTunes and walmart.com. Rather, subscription services will battle for consumer bucks with a battalion of other media and entertainment subscriptions that in recent years have crowded their way onto credit card statements across America.
At a time when disposable dollars are stretched thin by rising prices on just about everything, American consumers have been hit with a stealth campaign for a whole truckload of subscription services they never knew they needed.
Does anyone remember free TV? Nowadays a typical cable TV bill is about $50. Make that digital cable, and you'll pay $85-$105.
Prefer to keep your basic cable and go with an online video service? A Blockbuster or Netflix subscription will set you back $15-$18 every Visa bill. Still, you'll want to include a cable modem with your TV service. That's another $45 a month.
Now, how about phone service? Despite good old reliable "land lines," we've all got to have a cell phone. If you are a family of four, that's a minimum of $90 per month. If two members of that family of four happen to be of the teenage variety, you can count on another $10 per month for such "necessities" as ringtones and text messaging. And if mobile carriers have their way, the latter number will soon increase.
Speaking of teens, let's not forget that Xbox Live subscription. A mere $50 annually. Zap!
Of course, no self-respecting music fan can go without a satellite radio subscription. XM or Sirius will set you back $12.95 monthly. Pow!
A little quick arithmetic (no subscription needed), and we're now up to about $247 each month for digital cable, broadband access, cell phone service, ringtones, Xbox and satellite radio.
The music subscription services are hoping another $10 per month for access to unlimited tunes will just be another small ripple in this pool for most consumers. And they may be right.
But at some point, bill-paying Americans are going to hit the wall. If they are paying for Sirius, do they seriously need another service to load up another portable music player? If their kids have a game habit, are they going to support their music jones as well?
What's more, while consumers are accustomed to TV viewing, radio listening and telephoning as ephemeral experiences, maintaining a permanent collection of musical favorites -- whether in LP, CD or digital form -- continues to be a compelling proposition. Under the subscription model, access to those favorites is lost if the subscription is canceled.
How passionate will consumers be about music as a utility? We suspect they'll run hot and cold.