Warring models of music distribution

How should we pay for the music we listen to? In the digital, internet era, it seems to me that there are three business models.

In the first model, you pay for a lifetime right to each album or track you want to add to your collection. This is the most similar to what we are used to from purchasing physical media like records or CDs. You do not own the music of course; all you have ever purchased is a licence to listen to it.

Until now the digital equivalent has been downloads as offered by Apple iTunes or Amazon’s MP3 store. However, Apple has now announced iCloud, which extends this model to de-emphasise the actual download. You download a track to play it on your device, but there is no problem if you have more licenced tracks than you have space for; you can just download the ones you want to play. You can also “upload”, but when you do this, you do not really upload the tracks, but rather just inform iCloud’s database that you are licenced for them.

The second model is where you subscribe, giving you the right to play anything that your music provider has to offer. The most successful example is Spotify, which has a superb client for Mac and PC that offers near-instant playback of any of 13 million tracks.

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An advantage of this approach is that it is naturally social. Since everyone has access to the same library, you can share playlists easily.

The third model is where you do not pay at all. In pre-digital days, you could listen to the radio or swap tapes with friends. Now almost anything is available, legally through Spotify (though now restricted to 2.5 hours per week and 5 times per track), or illegally through countless sites easily found through Google, or through copying your friend’s hard drive stuffed with music.

Personally I am a fan of the second model. I think musicians should be rewarded for their work, and that all-you-can-eat licencing is the best and fairest approach, taking advantage of what technology enables. Buying a lossy-compressed download with a restrictive licence is also poor value compared to buying a record or CD.

I get the impression though that the music industry is set against the subscription approach. Apple seems reluctant to embrace it, hence iCloud is still tied to the first model. Spotify still has it, but the company now seems to be putting increasing emphasis on downloads and locally stored music, which is strange given its original concept, as well as making its ad-supported free streaming account less attractive.

The business reasoning, I guess, is a belief that selling music piecemeal is more profitable, and exploits the collecting instinct that has served the industry so well in the past.

The risk is that the third model will sweep it aside.

Related posts:

  1. 2010 a bad year for UK music sales as CDs decline and paid-for downloads fail to compensate
  2. Why Spotify should stick to streaming, not copy iTunes
  3. Spotify is now less free but still a better deal than Apple iTunes
  4. Amazon introduces its cloud player – but Spotify makes more sense
  5. Spotify everywhere: now on Logitech Squeezebox as well as Sonos, Smartphones