David Moser is an entertainment attorney and professor at the Curb College of Entertainment and Music Business at Belmont University.
Barry Sosnick’s commentary in the Nov. 12 issue of Billboard criticizes the major record labels for supporting low-priced college music subscriptions through such online companies as Napster and Rhapsody.
Although it is true that profit margins are very thin, college subscription services are serving a more important purpose than boosting short-term profits. They are acclimating college students to the idea of paying for music online, a practice that is by no means second nature to today’s young people.
Absent low-priced music offerings, the majority of students will likely resort to obtaining music illegally through file-sharing services, rather than purchasing CDs from retailers or even purchasing full-priced subscription plans or individual 99-cent downloads.
While Sosnick believes that low-priced online music offerings “are eroding music’s value and jeopardizing the industry’s revenue stream,” I would suggest that this has already happened-because of illegal downloading.
The proliferation of illegal file sharing has created a mentality that music should be free. The music industry now faces the daunting task of re-educating consumers.
College students are an important demographic group for the record industry, as they tend to be avid consumers of music. However, today’s college students have been able, throughout their teens, to obtain almost any recording they wanted for free (albeit illegally).
Although lawsuits and the ensuing media attention have made it clear that unauthorized file sharing of copyrighted works is illegal, that has not deterred a large number of people from continuing to obtain music illegally.
The record industry’s legal campaign against file sharing will have little practical benefit if it is not supported by realistic efforts to turn file sharers into purchasers. Offering discount-priced subscriptions to students is one way to stimulate that conversion.
Even though this may not be highly profitable for labels, getting people to pay even a relatively low price is better than having them not pay at all. Further, successful low-priced offerings have the potential to lead to higher-priced offerings as students graduate and enter the job market.
Universities, record labels and online music companies should be commended for making music available to college students at low prices. If anything, I would like to see an expansion of these efforts. Record labels can benefit by creatively using college online music offerings to brand themselves, market artists and develop new business models.
It may even be worthwhile to incorporate some type of educational component to help college students gain an appreciation for the difference between legally and illegally obtaining music online. Such a message will be better-received if the music industry provides relatively low-priced, legal opportunities to obtain music.
Like it or not, the music industry has changed, and relying on past business models is not likely to help it out of its slump.
Instead, innovative business models and educational efforts may ultimately lead to a culture where music is once again valued and record labels and others can earn reasonable profits from making it available to people in numerous ways. That said, I await the announcement of the first university to offer a legal file-sharing system to students.
