The latest…Warner Music Group said that it is looking for consumers to pony up $5 extra in their ISP bills to have full access to WMG’s library of content. The goal is to create a large pool of money to be distributed to the value chain (labels, artists, writers, etc). Jim Griffin was tapped by WMG’s Chairman/CEO, Edgar Bronfman to come up with this proposal and has said the fee is not mandatory. There’s been a LOT of hub bub about this.
Why? I don’t get it.
It all amounts to a cable operator model…where you pay a basic ISP fee, and an optional fee for premium services (much like the basic cable bill, then an extra fee for HBO).
The Problem
The potential problem that I see is actually economics. Someone pays $5/month to get unlimited downloads. But on iTunes, the tracks would be $.99/track. Depending on the division of that amount, I wonder how much dough WMG could be leaving on the table, given the reach of iTines and it’s massively used iTunes store. Presumably, WMG would pull all of its content off of iTunes for the cable model. But since iTunes acts as an enormous aggregator – with many fans liking non-WMG artists as well – then WMG might be limiting the amount of potential sales because people might not want to move over to a WMG platform to discover and purchase content (i.e., it loses some consumer ease of use).
A Tax???
Despite what you may have heard, Griffin explains that the fee is not mandatory and, thus, is not a “music tax”. If it were, I’d be yelling bloody murder too!!!
Some people don’t listen to music all that much in any form. Thus, a mandatory fee would force non-music lovers to subsidize music lovers – as the goal of any tax is. Opponents of a “tax” say the government would get involved. I don’t see the Fed getting involved in a private industry thing such as this, which doesn’t serve a moral purpose, rather than labels, artists, etc.
The Point
The point that Jim Griffin is addressing is that the industry has to move away from a model that controls distribution to one that seeks to monetize that distribution. The current route of suing every college student, and Tom, Dick & Dana for downloading should go the way of the dodo. Rather, if people are doing it anyway, find a way to make some money off of it. I have to agree.
Maybe there is another way to make money on the back end by investing in the companies that provide a better downloading/file swapping experience. Hmmm…kinda like investing in oil-related companies when you’re outraged that gas prices are going through the roof.
I still think that using music as a way to sell other services is the best model. That’s way more labels are considering 360 deals (they get a share in merch, concert sales, advertising, in addition to record sales).
