Digital Noise: Music and Tech

SanDisk's new Sansa Clip+ sounds like a solid choice for an inexpensive MP3 player, but I'm more interested in how it could boost SanDisk's slotMusic and slotRadio--two types of microSD cards preloaded with music.

The new Sansa Clip+ lets you load music from a microSD card.

(Credit: 2009 CBS Interactive)

When first announced last year, slotMusic seemed like a misfire: I couldn't imagine why consumers would pay almost the same price as a CD for a microSD card loaded with lower-quality files. The release of the $19.99 slotMusic player changed my opinion a little bit, but it still seemed too limiting: the only way to get music onto the device through microSD cards. I had the same problem with the slotRadio player, which came out earlier this year--yes, it comes with 1,000 songs for only $99, and you can add additional blocks of 1,000 songs for $39.99, which is great if you're not too picky about your music. But I am.

The Clip+ doesn't force any such choices. For your control-freak moments, you can sideload MP3s (and nearly every other type of music file except, inexplicably, AAC) from your computer, or attach a microSD card of your own making. Or, if you just want to add a bunch of new music without fiddling around with ripped CDs, downloads, and USB cables, you can use slotMusic albums or slotRadio bundles. Add the other features--voice recording, FM radio, and support for Rhapsody--and this seems like an amazing deal for a very flexible portable music player.

I'll readily admit that I'm not in the target audience for the new SlotRadio MP3 player from SanDisk, which became available last week.

The $99 device comes with a microSD card containing 1,000 songs, selected by Billboard editors from top-charting radio hits of the last 40 years or so, arranged in seven playlists--rock, country, hip-hop, and four others.

You can't edit or rearrange the playlists, you can't move the songs to your computer or any other device, and the only way to get new songs is by buying new 1,000-song cards for $39.99 apiece.

For a music control freak like me--I used to be the jerk at parties who'd secretly rifle through the host's CD collection looking for something I liked more than what was playing--turning my audio programming over to somebody else isn't easy.

There's a wee tiny rock band in there, and they're playing my favorite Steely Dan song.

(Credit: CBS Interactive)

But I got a chance to play with the SlotRadio today, and there's something refreshing about its simplicity. I took it out of the box while sitting on the bus and was listening to music in less than 30 seconds.

There's no software to install, no USB cable to plug in, no CDs to rip, and no need for the instruction booklet. It's an MP3 player for people who don't know what MP3s are--and don't really care--but just want to rock out to some good tunes without carrying their entire CD collection around in their car.

While I agree with CNET's Jasmine France that the sound quality is only mediocre, the bigger problem is the mainstream, middle-of-the-road selections chosen by Billboard.

SanDisk had to start somewhere, and Billboard is one of the biggest names in the biz, but each playlist sounded like a heavily audience-tested radio station programmed by some anonymous machine in a building in New York. That is fine...but if I wanted the risk-averse sensation of radio, I'd just turn on the player's built-in radio. I ended up using the skip button quite a bit.

As I said when I first heard about SanDisk's SlotMusic strategy, the format will succeed only if SanDisk quickly signs up some more eclectic curators. I'd gladly pay $40 for 1,000 blues songs curated by Buddy Guy, or 1,000 reggae and dub tunes collected by KEXP's Kid Hops, or the top 1,000 songs of the year as chosen by the editors of Pitchfork.

Better yet, what if SanDisk teamed up with Pandora? The target audiences seem almost identical: music lovers who can't find a radio station that matches their taste, and don't have the time or motivation to hunt down and buy (or steal) a lot of music themselves.

Users could order customized cards based on their musical profiles or Pandora stations. They'd have to be created on demand, which would be more costly than mass-producing the same card thousands of times, but Pandora already has the algorithms and infrastructure to create customized radio stations on the fly, so how much more expensive could it be to rip 1,000 songs onto a microSD card?

Anyway, SlotRadio is an odd but interesting little device, and I hope that SanDisk gives it the chance it deserves by branching out into the niche markets in which music lives today.

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SanDisk's SlotMusic strategy puzzled me at first. I didn't understand why anybody would pay almost the same price as a CD for an easily misplaced microSD card with lower-quality audio. The release of the $19.99 SlotMusic player, which is basically an MP3 player capable of playing these cards, changed my opinion a little bit. But I suggested that the real strength would come in curated cards containing, for example, a selection of songs from the Billboard charts. Given that a regular album cost $14.99 on this format, I figured that a curated card for the same price would include 20 or 30, or maybe 100 songs.

(Credit: Corinne Schulze/CBS Interactive)

At CES this week, SanDisk surpassed my expectations with the new SlotRadio, a $39.99 MP3 player with a preloaded microSD card containing 1,000 songs. That's four cents a song, plus you get to keep the player, which is capable of playing the SlotMusic albums and other music contained on a microSD card, and also has an integrated FM tuner.

The first players will contain cards preloaded with Billboard chart hits, which is a fine place to start, but SlotRadio could get really interesting if SanDisk branches out beyond the mainstream. Imagine a collection of the year's top-rated albums by Rolling Stone, Pitchfork, or Nic Harcourt. Or heck, go a little further and hire musicians to curate the collections: imagine Keith Richards' favorite blues songs, or an Alan Bishop collection. You might expect that music nuts--the kinds of people who care about Sublime Frequencies--wouldn't relinquish control of their playlists, but at four cents a song, I'd be happy to save myself the trouble of ripping or downloading 1,000 tracks and let somebody else drive for a while. As long as it's a driver I trust.

Like many other commentators, I greeted last month's SlotMusic announcement from SanDisk with befuddlement. I don't understand why a consumer would pay $14.99, which is almost the same price as a CD, for a tiny MicroSD card preloaded with digitally compressed audio. Yes, the attached USB dongle gives you compatibility with any computer with a USB connector. But still, a CD gives you higher sound quality, compatibility with billions of devices, and much less chance of misplacement between the couch cushions.

This Robin Thicke-branded SlotMusic player will cost $34.99 and come preloaded with songs from the artist. The regular players will cost only $19.99.

(Credit: SanDisk)

Today's announcement that SanDisk will also release a SlotMusic player for $19.99 changes my opinion a little bit. If you're just getting into digital music--and new teenagers and ex-Luddites are created every day--and want the cheapest way to take large quantities of music with you anywhere, a SlotMusic player could fit the bill. It's tiny--less than 3 inches along its longest side. Earphones and battery are included. I'm getting a unit to test out, so I'll let you know if the sound's any good.

The idea is that you'd buy a player and one of these preloaded albums, which comes on a 1GB card. Even with a full album of songs, artwork, and a couple videos, you'd have plenty of extra space to fill the card with other MP3s or unprotected WMAs. I'm not sure how many people have a bunch of MP3s and no MP3 player, but I suppose they exist--perhaps your older brother (or college-aged son) just left for college with his MP3 player and a new laptop, leaving a bunch of music files stranded on the home PC.

There's still a lot of potential for confusion: you'll have to remember which files you burned to which card before you put it in your SlotMusic player. But SanDisk also sells cards up to 16GB in capacity, and I suspect this is the real long-term play for the company. Once users get fed up with buying preloaded cards, they'll just move everything to a bigger card and never swap it out again. Not a great story for the record labels, but fine for SanDisk.

SanDisk also announced today that more than 30 artists from the four major labels are releasing albums on SlotMusic cards, including old faves like Jimi Hendrix and Kiss and new stars like Coldplay and Nickelback, with more artists to come by the end of the year. There will also be artist-branded SlotMusic players from Abba and Robin Thicke for $34.99. All are on sale at Wal-Mart and Best Buy, so mainstream American consumers are going to see these things.

If the format takes off, perhaps we'll begin to see curated collections. For example, maybe a radio station like Seattle's KEXP could sell a SlotMusic card with the top 90.3 songs of the year, instead of simply listing them on its Web site. Or Billboard could issue monthly cards with a selection of hits from its various charts. Rights clearance would be a chore, but not so much harder than putting together a compilation like the Now That's What I Call Music series. Other possibilities include higher-definition uncompressed audio files--imagine the 96kHz/24-bit masters of your favorite albums--or complete collections from single artists--no more bulky box sets.

Finally, one more sure-to-be-useless plea to SanDisk and marketers everywhere: can we please end the creative use of capital and lowercase letters in product names? The actual terms are "slotMusic" and "microSD," but I never remember to type them that way. Product names are proper nouns. Apple gets a pass because the iPod's been so ubiquitous in the media and advertising for the last five years that if I typed "IPod" or "IPhone" it would draw attention to itself, breaking the first rule of clean writing. But apart from Apple, forget it. Sorry.

The run-up to the holiday season always begins in September, and while I was overseas with no Internet access, the music and technology industries kept on churning. Fortunately for me, nothing's really changed. To wit:

SanDisk, in collaboration with the four major labels, announced a new physical format for albums called SlotMusic. You'll be able to pay between $7 and $10 and get a full album on a MicroSD card, which you'll then be able to plug into compatible cellphones or MP3 players to begin playing the MP3 files encoded at 320kbps. This one boggles me. If you need a physical artifact, CDs still exist, they play in billions of devices (car, computer, home stereo), they offer much higher quality sound, they have liner notes, and anybody with enough tech knowledge to know what a MicroSD card is can certainly figure out how to rip a CD to their hard drive and transfer the songs to an MP3 player. So why would I pay a dime for a tiny, easy-to-misplace "album" that offers lower-quality sound and compatibility with far fewer devices? Next.

MySpace Music launched with the support of the four major labels. This one has a huge built-in userbase, but the distribution model's all wrong: label-driven and top-down, unlike Imeem, where users post all the music. If I want to hear a song on demand--to see if I like a particular band, or just to satisfy a moment of curiosity--I'll go to the site with the largest selection, which is likely to be Imeem. If I want to buy a song, I'll do it in the store affiliated with my MP3 player of choice--iTunes, Zune Marketplace or (if I must) Amazon MP3. So what's the point of this service again, other than a too-little too-late attempt by the labels to capitalize on the MySpace name? Next.

Google and T-Mobile announced and demonstrated the first phone based on Google's Android operating system, the T-Mobile G1, manufactured by HTC. It's an obvious bid to compete in the consumer smartphone market, which was first tapped by Apple with the iPhone (before that, smartphones were generally business devices--think Blackberry and Windows Mobile). To compete in that space, there has to be an iTunes equivalent, so it's going to ship with a mobile music player that connects to a mobile version of Amazon's MP3 store. Call me a skeptic. I've tried the Amazon store and found it to be an exercise in frustration. So without having seen the G1 in person, I'm going to go out on a limb and predict that, at launch, the Amazon/Android app's going to fall way short of iTunes when it comes to ease of use. Give it a couple revs to catch up, but at launch, this won't change the competitive picture.

According to a report yesterday in The Wall Street Journal, Yahoo's restructuring plan will likely involve significant cutbacks at Yahoo Music, including the shutdown of one or more of its subscription-based services.

In fact, it looks like Yahoo has already removed all links to its Yahoo Music Unlimited To Go service. The service, priced at $11.99 per month, allows users to transfer files to a compatible portable device. The service now can be found only by conducting a search, and I'm not sure if Yahoo is accepting new customers for it. That leaves Yahoo Music Unlimited, which offers PC-only downloads for $5.99 per month, with an option to buy CD-burnable downloads for an extra $0.79 apiece.

This could cause some trouble for manufacturers of portable music players that don't have their own stores. I'm thinking particularly of SanDisk, which has the No. 2 position fairly well locked up at this point, with around 10 percent of the market, mostly at the low end. (Microsoft hopes to be in this position by next year, but so far hasn't officially announced any low-cost flash-based players, so it isn't in the same market category.) Today, SanDisk's Sansa Connect player is the only one offering a Wi-Fi-enabled device with a subscription-based service--that is, anytime, anywhere access to millions of songs. But that product relies on Yahoo Music Unlimited To Go. So SanDisk will either have to find another partner (Rhapsody?), build its own store, or fundamentally change the Connect--perhaps offering downloads only, as Apple's going to do with its iTunes Wi-Fi Store.

The decision to cut back on Yahoo Music also illustrates a point I made yesterday: online music stores generally exist to sell some other product. According to an Insider estimate from April by PacificCrest's Andy Hargreaves, Apple pays about 70 percent of the cost of each download back to the content owner. (Anecdotally, this matches up with the cut that independent musicians receive when they sell their songs on iTunes via CD Baby--see the end of this post on Digital Audio Insider.) After that, Apple has to cover various other costs (delivery, transaction fees to payment processors) and probably ends up keeping about 10 percent. Compare this with the estimated profit margins on Apple hardware like the iPhone (50 percent before the recent price cut) and iPod Shuffle (around 40 percent when it launched in early 2005), and it's clear that iTunes is meant to drive hardware sales, not the other way around.

Microsoft and Nokia are following a similar tack, building their own music stores in hopes of selling more devices. But for companies with no adjacent business, selling online music is tough. I imagine large retailers like Amazon.com and Wal-Mart Stores do OK because of their huge scale, and RealNetworks is making a go of it with Rhapsody, but smaller online retailers face a tight squeeze.

(UPDATE: RealNetworks has filed an 8-K form with the SEC that contains some more details about Rhapsody America. Most notable: MTV is contributing a $230 million note to the deal, and RealNetworks will in exchange be required to spend that amount with MTV on advertising. The joint venture is between RealNetworks and MTV, with Verizon as a distribution partner.)

The 2007 Consumer Electronics Show must've held some awkward moments for Microsoft.

The previous year, the company had trumpeted MTV's Urge music store as the showcase for the Windows Media Player 11 that was due to ship with Vista. Bill Gates had Justin Timberlake on stage to promote the forthcoming service, which would be integrated into the Windows Media Player (as was previously the case with other stores, such as Napster and MSN Music), and would "bring people's emotional connections with music to the forefront of the digital entertainment experience" (said a particularly ebullient press release). At the same show, Microsoft also made a big deal out of Verizon's V Cast service, which was the first to offer both over-the-air and PC-based music downloads using Microsoft's Windows Media Audio technology.

A year later, in 2007, Vista was still not out--the result of a final delay that had the OS missing the 2006 holiday season--so Microsoft was forced to trot out Urge and Windows Media Player 11 yet again as examples of how great digital media would be in Vista. Only this year, there was a new wrinkle: in the interim, Microsoft had announced and launched its own competing music player, software (why "integrate" with the Windows Media Player if you can build your own dedicated app?), and store. None of which were compatible with the vast array of products from long-standing partners, such as MTV and Verizon.

At the time, Microsoft insisted that its PlaysForSure initiative (which identified compatible Windows Media-based players and stores from third parties) was not dead, but would remain on a separate but equal development path from Zune. Apparently the partners didn't believe it. First, Samsung jumped ship, creating its own player-store-software combination. Now MTV and Verizon have teamed up with Microsoft's oldest competitor in the digital music space, RealNetworks. The ink's still drying on the deal, but their goal is to launch a new company, Rhapsody America, that will give users access to a huge library of music from almost anywhere--the "celestial jukebox" that many music fans have been wanting for years.

The alliance makes sense. Rhapsody, which consistently wins praise from reviewers and users, would get a huge marketing boost from both Viacom/MTV (which recently announced plans to spend $500 million expanding its game portfolio) and Verizon, as well as a new distribution channel (inclusion on Verizon phones, sales of over-the-air downloads). MTV gracefully shutters Urge--which never had a chance to get off the ground--without abandoning the online music market altogether, and gets a way to distribute music to mobile phone users. Verizon gets an online subscription service to add to its over-the-air and download-based services.

So now it's Microsoft's move. Will they respond by adding an over-the-air component to Zune? (As SanDisk and Yahoo teamed up to do, and RealNetworks and iRiver plan to do.) An announcement should be coming in the next couple of months if they're going to get anything new out in time the holidays.