Recording Industry Making It Impossible For Any Legit Online Music Service To Survive Without Being Too Expensive

from the good-job dept

Wed, Nov 18th 2009 1:50am — Mike Masnick

You just knew it would happen again. Every time the recording industry finally agrees to license a new music service to try to take the "sting" out of "piracy," it demands licensing terms that are ridiculous. From the execs at the labels' perspective, unless you pay an arm and a leg, you don't get to offer music. So, a few companies agree, and then realize it's impossible to make any money and shut down. In the meantime, the whole point of those legal licensed music services (to compete with "pirate" sites and services) is lost entirely. Wired is chronicling how all of the legal music sites are finding it impossible to survive and offer a free music service -- including MySpace music (which beyond not offering much of value in terms of user experience) "is struggling to keep up with its own payments to music copyright holders."

Of course, it's really no surprise that most of these sites have struggled. Beyond the ridiculously high licensing rates that the labels forced on them (often by negotiating through lawsuits), none of these sites put together a well thought-out business model. Instead, they all seemed to think that they could just slap ads on the site and that would be enough. But, of course, when you're listening to music, you're not looking at that website or paying attention to the ads -- and if the ads got too intrusive, they'd just go elsewhere. A real business model would have been setting up something more comprehensive, that gave listeners a real reason to buy associated with the music. Eventually we'll get there, but in the short-term, the graveyard of failed "licensed" music startups will grow, just as more and more "unauthorized" sites grow in popularity.

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Filed Under: expense, licensing, music industry, music services, online, recording industry
Companies: imeem, myspace, spotify

45 Comments

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rottendik, 18 Nov 2009 @ 3:37am

"Too Expensive"
I'd like to see a dialog / debate / argument on what "too expensive" means.
I loathe the dinosaur that is the RIAA if for no other reason than several of my favorite bands growing up essentially went on strike against them over crappy contracts robbing me and everyone else of more music.
With that out of the way... what is "too expensive"? To me spending +/- $1.00 for a song that I am able to listen to for every single moment I am breathing from now until I die doesn't seem like too much to pay. How about you?
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R. Miles (profile), 18 Nov 2009 @ 3:50am

Re: "Too Expensive"
To me spending +/- $1.00 for a song that I am able to listen to for every single moment I am breathing from now until I die doesn't seem like too much to pay. How about you?
I love it! That is, provided I only want *one* song for the rest of my life.

Now calculate this for someone who wants to listen to 10,000 songs from various artists during their lifetime.

That's $10,000 dollars, genius. Wait, I forgot the addition $3000 since songs are really $1.30 now.

Still think it's not too much to pay?

And note, genius, if the $1.30 model doesn't work, expect to see even *more* increases to pay those who don't sing, write, perform, or do anything else but "represent" artists who actually do but get ___SCANT___ from each "$1" made.

Insert Einstein quote regarding an infinite universe here.
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Anonymous Coward, 18 Nov 2009 @ 4:12am

Create a site with only creative commons music. Then the RIAA can't touch you without generating huge backlashes and protests.
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Rabbit80 (profile), 18 Nov 2009 @ 4:20am

I hear that VPN's are doing well for business these days.. Why don't the music industry offer a VPN service where for a flat fee you can download as much as you like legally? They wouldn't have to worry about software, or user interface etc... They could even team up with existing VPN providers to offer a flat fee "Music VPN"!
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Chill, 18 Nov 2009 @ 4:31am

Re:
http://www.jamendo.com/en/

I'll just leave this here.
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Chill, 18 Nov 2009 @ 4:32am

Re:
http://www.jamendo.com/en/

I'll just leave this here.
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Nate (profile), 18 Nov 2009 @ 4:46am

Re: "Too Expensive"
Minus the snarky tone from Miles, I agree that purchasing music is too expensive. I used to pay $1.06 (included tax) for songs with DRM through iTunes. After $500 worth I just couldn't justify spending any more on music when there were better (for me?) alternatives.
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rottendik, 18 Nov 2009 @ 5:07am

Re: Re: "Too Expensive"
Mr. Miles....

"Genius" huh? Would it surprise you to learn that I am am a musician that has recorded and toured?

Now if you wanted to call me a rich pig that might be fine (incorrect but fine).

THe question that you did not answer is what is a song worth to YOU not why am I unintelligent for feeling that a song is worth $1 to me.

One more for the record... I've never paid $1.30 for a song since iTunes opened but I (like you) did so constantly when CD's, cassettes and LP's were the media of choice.

So... holster your weapon and let us know what a song is worth to YOU and what YOU think the right business model is.
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Simon, 18 Nov 2009 @ 5:35am

Re:
What have VPN's got to do with it...?
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Pablo, 18 Nov 2009 @ 6:08am

Too Expensive
@rottendik

For me, it's not so much that $1 is too much, its the fact that the majority of that $1 goes to the people who really have very little to do with creating that music that I love so much.

I don't like to support what the RIAA is doing with pretty much anything, but I would love to support the artists with the full $1. That is why when Radiohead released their full CD from their website, I paid $15 for that download, even though I didn't actually have to pay anything.

I'm not saying that business model works for everyone, but it worked for them and for me, anytime you can make the consumers happy and turn a profit at the same time, seems like a good one to me.
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SteelWolf (profile), 18 Nov 2009 @ 6:12am

Re: Re: Re: "Too Expensive"
A digital copy of a recorded song? $0. The business model? Using that to sell things that are actually scarce.
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SteelWolf (profile), 18 Nov 2009 @ 6:14am

As legitimate sources for free on-demand music dry up, fans will likely head back to file sharing networks, which is bad news for everyone involved in music Really? Where is Eliot Van Buskirk from, 1999?
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rottendik, 18 Nov 2009 @ 6:18am

Re: Too Expensive
Pablo,

Couldn't agree with you more!

Some examples of this would be SST, Dischord and Sudden Death which are all / were artist run "labels" where the bulk of the cash went to the content creator not the content distributor.

I see exactly $0 added value from the RIAA but sadly they and many many others take the cash before leaving the artists with little to drop in the bank.
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Christopher (profile), 18 Nov 2009 @ 6:20am

A nickel a song.
Or half a buck per album. If my favorite artist offered direct FLAC downloads of the album for two bucks, great, I know it's going right to the dudes. Otherwise, I'll just go cheap/easy and wait out the storm.

Thief? Maybe, but in reaction to the alternatives.
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vyvyan, 18 Nov 2009 @ 6:27am

Re:
VPN stands for *Very Private Network*, yeah literally.

What have you gotta hide if you're going legit?
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rottendik, 18 Nov 2009 @ 6:29am

Re: Re: "Too Expensive"
Nate,

I'd like to use some comparative purchases to advance this discussion.

Let's say an average new car costs $15,000. It comes with a 5 year warranty after that you spend $1000 / year on maintenance. Let's leave tires, gas and oil changes out of the equation please.

You keep the above car for 10 years which is the end of it's life; so you've got $20,000 "invested" and accomplished many tasks over 10 years but now have nothing but memories.

Now you could have purchased a used car instead saving $5000 for arguments sake over the same 10 years. That implies to me that the new car is somehow worth (at least) $5000 to the purchaser.

So... If I personally had the choice of "owning" +/- a 5,000 song library for life but that required that I drive a used car for 10 years I would gladly make that trade.

Another quick example; I would rather have five new "albums" than the latest Wii game.
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Bad Analogy Guy, 18 Nov 2009 @ 6:37am

Re: Re: Re: "Too Expensive"
1) Many bad analogies contain a reference to an automobile.
2) Most bad analogies contain a comparison of two items which are not alike at all.
3) This particular bad analogy goes above and beyond the call of duty with its bad financial analysis.
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Genius, 18 Nov 2009 @ 6:38am

Re: Re: "Too Expensive"
Thinking of it 13K over a lifetime isnt very expensive! Over 25 years it comes to $1.50 a day :)
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KevinJ (profile), 18 Nov 2009 @ 6:44am

Re: Re: Re: "Too Expensive"
"Would it surprise you to learn that I am am a musician that has recorded and toured?"

"So... holster your weapon and let us know what a song is worth to YOU and what YOU think the right business model is."

One of the problems that most of us have isn't with the $1 price tag for a song. Let's say I buy one of your songs from iTunes. How much of that $1 would you see directly? One penny? Two? Maybe half a penny? Please enlighten us to how much of that $1 you get directly.

If I did buy one of your songs, I would want most of that $1 to go to you instead of an organization that then turns around and sues everyone who dares enjoy music.
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PaulT (profile), 18 Nov 2009 @ 6:55am

Re: "Too Expensive"
I believe you're missing the point with the "too expensive" comment. It's not a question of whether or not it's too expensive for the end consumer (i.e. you), but whether it's too expensive for the new company.

That is to say, the current market value for a song is around $1 (or £1 ($2) in the UK...). A startup company would have to be suicidal to raise their prices *above* those of the current market leader, so they have to price their goods at $1 or less.

The issue is that the RIAA are charging so much that they cannot make a profit by selling tracks at $1. Therefore, it's "too expensive", and this is what's killing the new business models before they have a chance to succeed.
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chris (profile), 18 Nov 2009 @ 6:59am

Re: Re: Re: "Too Expensive"
One more for the record... I've never paid $1.30 for a song since iTunes opened but I (like you) did so constantly when CD's, cassettes and LP's were the media of choice.

no you didn't. you paid $15 for a CD with 12 tracks. 1-4 of which were decent and the remainder was absolute crap, moving the unit price of the tracks you wanted to somewhere between $4-$15 for a decent track.

compared to that, $1.30 is a steal. had DRM free tracks been available in 1999 for $1.30 each, perhaps things would have played out differently.

unfortunately, more than a decade has passed where music has been distributed freely, changing most consumers' minds about how much a track should cost.

this is the problem: the industry types see $1.30 per track as a tenfold reduction in cost. most consumers see $1.30 per track as a thousandfold increase in cost and will therefore keep doing what they have been doing for the last 10 years.
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Mike Masnick (profile), 18 Nov 2009 @ 7:06am

Re: "Too Expensive"
what is "too expensive"? To me spending +/- $1.00 for a song that I am able to listen to for every single moment I am breathing from now until I die doesn't seem like too much to pay. How about you?

As others have pointed out, the issue isn't the consumer price, but how much the labels demand.

And the article wasn't about iTunes pay for song downloads, but for streaming services like MySpace, iMeem and Spotify. The labels are demanding extremely high rates that simply cannot be made up in the current business model.
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Anonymous Coward, 18 Nov 2009 @ 7:10am

Re: vpn
they wouldn't dare do something like that without drming the hell out of it
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scarr (profile), 18 Nov 2009 @ 7:15am

Re: Re: Re: "Too Expensive"
Unless you only started buying this year, you have plenty of music with DRM on it. Some people didn't like that. Your model of building a library would only start this year for them, which leaves a lot of time to get up to 5k songs.

All your music is transformed by the encoding process, which as a musician, you might appreciate the difference in. Some people don't like that.

Some people have libraries even larger than 10k songs. Mine is upwards of 20k (and legit). At $1/song, I couldn't have afforded to enjoy all that music. That price seems ok on the surface, but it breaks down as you scale it up.

I'm a musician as well, and I know I wouldn't be the musician I am today if it wasn't for more affordable music.

As this site often points out, the price of a digital good drives to zero. Unless you sell something of value (the music has value, but not the files you or iTMS distributes), people won't want to pay anything for it.
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Rick, 18 Nov 2009 @ 8:05am

Re: "Too Expensive"
I think about $.50 a song is very reasonable. If I have the option to put that song on any device I want to listen to it on, never have to worry about other fees, and can make backup copies to protect my purchase. And the money goes to the musician and writer.
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Anonymous Coward, 18 Nov 2009 @ 8:21am

Today on the Philadelphia rock radio station I heard about a new rock band with R&B roots starting to come into the light. The person (someone famous boys 2 men or something) was noting, along with the morning talk people, that they are focusing on presentation and putting on a good show because you can't be an artist in this age by selling music. You are selling stuff that can't be copied and pasted. They said it in other words and didn't dwell on it long but it was obvious he wasn't saying the internet had destroyed his life long profession, it just changed it.
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Kyote (profile), 18 Nov 2009 @ 8:31am

Re:
The thing is, they'd feel the need to DRM the offerings. And by doing so it would limit what could play that music. Those who know what this means see it's NOT worth the fee. Or at least, not worth any fee the *AA's would institute, or accept.
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Basher Basher, 18 Nov 2009 @ 8:57am

Re: Re: Re: "Too Expensive"
>Would it surprise you to learn that I am am a musician that has recorded and toured?

That only means you have a HIGHLY over inflated opinion of what music is "worth".

Or, perhaps... becuse you life revolves around music... you see no issue with it.

A true collector may spend $100,000 for a classic car. It doesn't mean it's worth that much. It doesn't mean someone else would pay that much. It means... to that guy, because of his passion... that particular car was worth $100,000.

It doesn't mean that a factory could start cranking out replicas and expect other people to pay $100,000.

I am so disgusted with the pettiness and greed of the music industry - and musicians in general, that I now listen to talk radio or news radio 99% of the time.

Everyone just wants to be a rockstar and get rich. Otherwise, like musicians of the past - you'd be happy just to have people listening to your music - sharing your passion.

There's a reason the "starving artist" stereotype is a stereotype. When it's a passion, you do it whether you make money or not.

Nowadays, everyone wants to bleed you dry for listening to their music... even if they only have one or two songs worth actually listening to and the rest are crap.

Back to talk radio.
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Flyfish, 18 Nov 2009 @ 9:07am

Re: Re: "Too Expensive"
Oh get real. I suppose my 1000+ pieces of vinyl, containing about 9-10 songs per cost $10K? More like $3-5K based on the prices at the time I bought them. I don't mind, I have music you'll probably never hear because it's never been digitized and likely never will be. I don't download MP3s, I buy CD's and rip. I get better quality and I don't get screwed when Joe Blow's download site goes out of business (musicmatch, google music, Microsloth .....)

Desipte the cost per copy of the final product being almost nothing there is a cost of creation that can be substantial. Should artists and the companies that employ and promote them eat that cost?

Unlike all you reluctant capitalists I have no issues paying for what I consume. Though I'd rather it all went to the artist. I get the RIAA sux part, I get the XXX record company sux part. I just don't get the "I'm a cheap bugger so music should be free because I want it to be" part.
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Michael Long, 18 Nov 2009 @ 10:26am

Re: Re: "Too Expensive"
"That's $10,000 dollars, genius."

If you stop at Starbucks every monring before you go to work and buy a $4 latte you're going to spend $52,000 over the course of your working lifetime.

Put into that perspective, genius, $10,000 is nothing, fifty cents a day, 1/8th the amount you're going to spend on ONE cup of coffee.

And, by the way, 10,000 songs also meant that you were effectively buying one new song every other day during the same period. A rate of purchase I doubt you'd sustain.

Or are you saying that you value your music that much less than a friggin' cup of coffee?
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mattarse (profile), 18 Nov 2009 @ 10:56am

Re: Re: Re: "Too Expensive"
yeah, but ummm I don't stop at Starbucks (or any other over priced coffee shop) more than a couple of times a year - in large part because to me they are way overpriced.
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Anonymous Coward, 18 Nov 2009 @ 12:08pm

These comments are crazy, running around and around and around in circles.

If you think music is too expensive, don't buy it.

But don't listen to it either. Go out and support whatever art you feel is worthwhile but quit demanding the price be at what you insist it should be. Just don't buy it.
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Anonymous Coward, 18 Nov 2009 @ 1:34pm

Re:
Maybe so, but what happens when the RIAA sues me for NOT buying their content? Or the gov't passes legislation forcing consumers to buy x songs per month? I know, it sounds absurd.....
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batch, 18 Nov 2009 @ 3:28pm

Is this why Last.fm kinda sucks?
It was just added to the Xbox yesterday. I can search for an artist and get the artist's radio station, but all the music is not by the artist? Its all "sounds like" the band you searched for songs. Sure, discovery is cool, it was really nice when I discovered a band I wanted to listen to while listening to a genre station, searched for them and then couldn't listen to a single song by them. On the radio station named for them! How does that make sense (to a rational human being, not the RIAA)?

They don't even offer a way to actually pick what you listen to as a regular product yet. From their website:
http://www.last.fm/xbox/help

Will buying a subscription allow me to listen to any track I want?
No, our current basic subscription doesn’t allow for any on-demand listening; a basic subscription will give you the benefits described here, but it won’t allow you to play any tracks you want in full length that you can’t listen to as a non-subscriber either.

In the US, the UK and Germany we’re publicly beta testing our free listening service called “Free On-Demand”, which allows you to listen to most tracks up to three times for free. When the beta is over, we’ll offer a different subscription package with unlimited access to our music catalogue.
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Daemon_ZOGG, 18 Nov 2009 @ 3:49pm

Re: Re: (about the VPN comment)
I agree, Simon. What a Noob. Right?

;D
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Anonymous Coward, 18 Nov 2009 @ 3:55pm

Re: Re:
Maybe so, but what happens when the RIAA sues me for NOT buying their content? Or the gov't passes legislation forcing consumers to buy x songs per month? I know, it sounds absurd.....

Ridiculous strawman is ridiculous.
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Daemon_ZOGG (profile), 18 Nov 2009 @ 4:00pm

Recording Industry Making It Impossible For Any Legit Online Music Service To Survive
The pirates provide better content delivery.

:D
;D
:D
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Marco Paolo, 18 Nov 2009 @ 4:46pm

Morons or Wily?
Do you think they want new business models to fail? I mean they're trying to get new laws and treaties passed and signed in which they can control information on the net. I'm no conspiracy theorist, but it seems that if these new businesses fail, they can convince politicians to protect their old model and return to the good 'ol days. Just a thought.
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Keith, 18 Nov 2009 @ 5:51pm

Re: "Too Expensive"
That's not what too expensive means. It means the 20 million a month Myspace pays just to stream music because of those licensing fees. Not including the other overhead of running Myspace as a business. Especially when you take into account that Myspace is promoting them(the majors). Myspace isn't making money like that, their parent News Corp. Is footing that bill and it has gotten old. So yah 20mill a month is alot for me to have the opportunity to promote someone else's product that may or may not sell especially when you are doing everything wrong as an industry.
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Anonymous Coward, 18 Nov 2009 @ 5:55pm

Re: Re: Re: "Too Expensive"
Music should be free though. At least older music. Works that should have entered the public domain? Years ago?

Oh right. Nothing's free. Not even our shared culture.

If the entertainment industry wants to play this game then I say to hell with them. Once they pull their collective heads out of their collective asses then maybe I will feel sorry for them. But it's too late for that.

Our culture is free to share. If there exists a government-enforced monopoly on creative work that lasted a reasonable amount of time, I would be with you.

But copyright lasts centuries and that just ain't right.
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Anonymous Coward, 18 Nov 2009 @ 5:59pm

Re:
I would love to support old music that should be in the public domain.

Oh wait, what? The public domain has stopped growing because the entertainment industry bribed, sorry, lobbied the government to extend copyright for centuries.

Well, I guess I have no right to complain. But then again, I don't buy or download or listen to music.
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Anonymous Coward, 18 Nov 2009 @ 6:02pm

Re: Morons or Wily?
Here's the biggest obstacle they face in that scenario. The public ain't going to go back with them to the good 'ol days.

I say leave back there to rot and die. Or they could try to innovate? They've had the past 15 years to do so.

I'm still waiting.
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Jan Hopmans (profile), 18 Nov 2009 @ 8:58pm

Re:
I don't buy. So I copy. :)
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Musicman, 19 Nov 2009 @ 9:33am

Man... You guys really sound like a bunch of entitlement bitches. Wanting everything for nothing, I bet your the same cheap fucks that bitch about walmart being to expensive.... And the same lazy fuckers who want your employer to pay you way to much for doing fuck all.

Nothing is free... Muthafuckers worked their whole lives to get to the point where they are actually marketable and you just expect it for free. Just like free healthcare free gov cheese

Fuck off and die
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Theo, 19 Nov 2009 @ 5:18pm

Re: Re: Re: Re: "Too Expensive"
Heres a lovely car analogy:
I want to make a car. I have skill in design but need materials to make it. If i want it to be successful i need access to factories' production lines and distribution networks - many car companies have been around for a long time making their contacts and factories and have economies of scale. I can't expect to make my cars for free or to have them distributed and marketed for free so i pay the owners of the car company some of my earnings. If i didn't do this, I would never have the chance to make the car with any success.

Why is there a hatred towards record labels for a few select high profile screw-ups. They are necessary for the process at larger scale. another analogy, Bill gates didn't run his entire business himself, he got experts to help with his expertise.
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