The Digital World of Music - Business Models Continued

I think the discussion on my last posting about digital music was great. If this topic interests you, you should take a moment to see the comments thread as people posted some really thoughtful stuff.

In case you didn't see this - the New York Times reported that Universal Music Group is going to put their full catalog on Imeem. From the business model perspective this is interesting as it highlights a hybrid approach. The consumer gets limited portability from their music - but unlimited selection. Then, if they want portability, they get the chance to buy for the $.99/track model. The real revenue (so hope the music producers/distributors) comes from advertising on the site. In other words, your listening experience gets subsidized by Snowboard manufacturers and the like.

The other news item worth looking at was this from - Radiohead's experiment, (or was it a media-hype play?) to put up their latest album and let people pay what they want, seems to have gone belly-up. They are reverting back to existing business models of CD distribution and cutting a deal with iTunes. This is reminiscent to me of when Stephen King put chapters of a book up hoping to get people to pay him directly vs. dealing with those pesky publishers.

The last thing I will launch out there is an idea from a colleague of mine at Microsoft who has pointed out that at the heart of the discussion about how we will consume music in the future is the idea of fair use. The lack of clarity around what constitutes fair use of music (in the legal sense) results in a disconnect between what consumers expect they can do with music and what distributors feel is appropriate.

I'd love to hear from someone who has some real experience on that front as it would be very educational for all of us.

On the personal front - I have downloaded 600 songs in the past week and a half. Artists who I have known about for a while and some completely new artists (to me, that is). There is simply no way I would have done this on a pay-per-track service. It is this user experience that has driven people to the P2P networks and to massive piracy. They want to experiment and dabble. If the distributors can figure out a way to make that experience compelling, with both low subscription fees (and advertising) - then they are likely to capture a much larger percentage of digital downloads under legal terms. Especially if they can find ways to add value to the user experience.