Is it just me, or does anyone else think that the digital music industry’s business plan du jour won’t work? Subscription model? How is that more reassuring than the previous two gimmicks: counting on advertising revenue and giving away music for free (or file-sharing)? Now that the ad thing hasn’t panned out and since the almighty 9th Circuit Court of Appeals shot Napster full of holes, all the tech world’s abuzz about subscriptions. This is due in part to Napster’s proposed settlement with the music industry, which would distribute $1 billion over five years to major and independent labels, relying on revenues received from subscribers to various membership plans. Napster would charge $2.95 to $9.95 per month depending on the number of songs a user wishes to download. Never mind that those users can currently do this for free, that programs similar to Napster are already available as alternatives, and that the recording industry laughed Napster’s proposal out of the headlines.
Yet the basic idea that consumers will shell out another monthly fee hasn’t been called into question. By another, I mean in addition to the phone bill, cell-phone bill, (digital) cable bill, DSL, and magazines, not to mention all the new subscriptions of the past year and those on the horizon. Let’s see: There’s Palm.Net, which can run you between $9.99 and $44.99, depending on how much you want to use the Web clipping and e-mail service on your handheld. There’s satellite radio, slated to begin this year, with two companies charging about 10 bucks a month to get a hundred-plus music and talk channels beamed to your car. There are existing Web entertainment subscription plans, like Real’s GoldPass ($9.95 per month)—with access to music downloads, NBA Web casts, and something called “The Bikini Open 3″—and Emusic Unlimited, a cornucopia of music MP3s for about 10 bucks a month.
My question: How many $10 subscriptions can one person afford? Or, put another way, isn’t this whole subscription model thing just a substitute for the failed ad revenue model? Apparently not. I spoke with Matt Bailey, an analyst at Webnoize, about music plans such as the one proposed by Napster. “There’s no doubt in my mind that this will catch on with consumers,” he told me. The one caveat he offers is that successful subscription services won’t be based on peer-to-peer setups like Napster, but on more reliable business-to-consumer models such as those offered by Emusic or MP3.com.
Why is he so confident that subscription models will work? Webnoize asked 3,000 college students and Napster users whether they’d pay $15 a month for the service, and 70 percent said yes. I’ll buy that—when I see it.
Richard A. Martin is Seattle Weekly‘s technology editor.
