Universal Music first floated the idea of Total Music in 2007 as a way to give customers an alternative to free MP3s available on file-trading networks and anonymous Internet sites.
At that time, the business model called for hardware manufacturers to pay some extra amount--perhaps $5 per month--and optionally pass this cost along to consumers. In return, consumers would get the right to download as much music as they wanted, for free, during a certain time period.
Nokia eventually launched a similar plan, Comes With Music, but Total Music (which became a joint venture between Universal and Sony Music) ran into some antitrust questions and eventually shifted its focus to ad-supported streaming and paid downloads.
Now it's dead, along with Ruckus, a college-specific music download service that Total Music quietly purchased last summer.
Blame the economy if you want, but the real reason for the failure of these services--and every other record industry effort to capitalize on the Internet for distribution--is revealed in two places in this blog post by Total Music's vice president of product management, Jason Herskowitz.
First, he built a mashup service called Friendp3, which takes his friends' Last.fm feeds, searches the Internet for the same song posted somewhere as a free MP3 file, and creates a playable playlist of those songs. On demand. Like the excellent Songerize service--which lets you enter a song name and hear it on demand--it uses the Seeqpod playable search engine on the back end. Very cool.
But the technology's not the point. Did you see what just happened there? There is free music on the Internet! Available with no advertising and no restrictions. That means that any new music service, industry-sponsored or otherwise, is not only competing with iTunes, or Pandora, or Last.fm, or MySpace, or the latest ad-supported-service-of-the-week. It's competing with millions of MP3s uploaded by users and easily findable, thanks to the rapid advances in Internet search technology.
Hold that thought for a second as we come to the end of his blog post:
But wouldn't it be cool if there was a way to do this on a platform that plays nice with everyone? And compensates those that deserve compensation? And somehow can magically cover the costs associated with all of the above (hint: this is the kicker)?
Yes! Yes, it would be cool! I would like a free pony and no more dental appointments as well. And a mint-condition low-mileage black 1997 Mercedes E Series. With tinted windows.
Not to be too flip, but this sentence gets right to the nut of the problem with industry-sponsored online services. Their primary concern is getting paid and making sure that everybody else in the traditional value chain gets paid. That's a laudable and perfectly understandable goal. But that's how they miss the point, again and again and again. In order to create a service in which everybody gets paid, somebody's going to have to be paying.
The only way you will get customers to pay more than zero when there's so much zero-cost unrestricted content out there is by offering them a compelling benefit they can't get anywhere else. This is why iTunes is successful--it offers customers the easiest way to find and buy new music to load on their iPod.
What did Ruckus offer? DRM-encrusted downloads that couldn't be transferred to a Zune, much less an iPod. What did Total Music offer? We don't know because it never launched, but I'm willing to bet it didn't have a clear and compelling customer benefit.
I don't know what the magic formula is. Forget advertising--the ads are so ignorable, and CPMs so low on these kinds of services, that they'll never cover the cost of the content, and users will absolutely reject more intrusive advertising like an audio ad every 10 songs. (Remember: you're competing with free.) So you have to get users to pay.
What are they willing to pay for? A bigger back catalog? Some sort of online storage locker for downloads, which would then let you play them from any Internet-connected device? The ability to share songs with a friend in a seamless electronic way--the equivalent of playing the record you just bought for them, only, you know, with computers and Internets and stuff?
The sad thing is that many of these things have been tried, and industry players have done everything in their power to stymie them with lawsuits (the original MP3.com, file-sharing networks), copyright fees (the battle over online radio), and unreasonable DRM restrictions (take the original Zune's "three plays, three days" restriction on device-to-device sharing, which killed what could have been an interesting feature). But perhaps it's not too late to try again.
Yesterday, Nokia announced a new initiative, Comes With Music, that will offer "free" music to purchasers of certain cellphones. It's the first outgrowth of Nokia's Ovi brand, which the company announced earlier this year. It also seems to be the first implementation of Universal's Total Music plan, in which device makers bundle a music subscription on new devices and add the cost to the price of the device, rather than forcing consumers to pay the monthly fee.
(Credit:
Nokia)
As with all such services, the devil's in the details. According to Ars Technica, there's an awful lot of deviltry going on.
First, the good points: unlimited downloads, yours to keep and play forever, playable on both a computer and your cellphone.
However...the downloads are protected with DRM. (Ars Technica reports that it's Microsoft's PlaysForSure system, but this doesn't sound right to me: Microsoft has a phone-specific DRM system, PlayReady, and Nokia was the first customer for that system, so it would seem odd for Nokia to use a three-year-old DRM system designed for portable and in-home devices instead.) Regardless of which system it's based on, the DRM will reportedly not allow users to burn tracks to CD unless you buy the download again--this closes the analog hole by which users could download a million tracks, burn them, re-rip them to MP3, and post and share wildly. Also, any track protected with a Microsoft DRM system almost certainly won't be transferable to Apple's iPod, and might not be transferable to other types of MP3 players either.
But here's the oddest part: after your year's up, the subscription expires. You get to keep whatever music you've downloaded, but if you want to continue downloading new releases, you'll apparently have to buy a new phone. And Nokia's not yet saying how much extra these Comes With Music phones will cost.
As Saul Hansell points out in the New York Times, Comes With Music/Total Music is at least a good stab at an alternative business model. The current model's certainly not working for the industry. But these "free" tracks have to compete against millions of MP3 files that are already out there, and are actually free in every sense of the word--no cost (free like beer) and no usage restrictions (free like freedom).
Here's an alternate suggestion. Remove the DRM restrictions, but put a monthly limit on downloads so users can't download every song ever recorded then cancel their subscription and keep the music. Maybe 500 songs or 50 albums--that's a very generous amount for even the heaviest music fan. When a certain time period's up--say, a year--start charging for the subscription. A plan like this would still offer significant advantages over file-trading networks--over-the-air downloads, no legal risk, sound quality assurances, no false file names--while being "free" enough in both senses of the word to keep users around.
There's a fascinating story in the upcoming Business Week about a new business idea being floated by Universal Music chief Doug Morris. Universal would offer some portion of its catalog under a new service tentatively named Total Music. Users would buy Total Music-enabled devices, and get access to this music for free. No per-download charges, no monthly subscription fee, no advertising. Apparently, Sony and Warner have signed on to the idea, which would give Total Music access to the catalogs of three out of four majors.
The labels and artists and copyright holders have to make money somehow, right? Of course, and that's the catch: instead of users paying for music, the manufacturers or distributors of Total Music devices--think cellphone handset makers and carriers, or companies like Microsoft and SanDisk--would pay the labels $5 per unit per month. It would be up to them how and whether they wanted to pass this cost along to consumers. In the case of a cellphone carrier like Verizon, they might bury the charge in customers' monthly bills. Handset makers might charge about $90 extra, based on the average replacement time of 18 months. And Microsoft, which has shown its willingness to accept sizeable losses in order to conquer a new market, might even eat the extra cost to give the Zune a leg up on Apple's iPod.
Of course, it's just an unconfirmed story at this point, and many details aren't known: the number of songs available, the formats, the DRM situation, the royalty split with copyright holders, and interface/usability issues could all sink the service. Even so, it's a welcome change from the sclerotic yesteryear thinking that's categorized the music industry's response to the digital era for the last decade. As they say, the first step in solving a problem is acknowledging that there is a problem.
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