New Music Industry Revenue Model Working – Maybe

Well, sort of at any rate!

Increasingly young people dont consider downloading music to be “piracy” but in fact their right. The famously referenced story (“in 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there”) highlights the immense turnaround the music industry has had to face. We’ve talked about music branding and advertising funded musicians before, but The Economist is back with a new article that may have the solution!

Consumers would like access to an easy-to-use jukebox of free, unlimited music. The industry, meanwhile, is trying to move from selling products to selling services, and charging people a subscription for access to online music.  Why would we bother, I hear you say. We’d be locked in to some honky restricitve system, and if we stop paying subscription fees, we get nothing.

The Economist – and Nokia - believes that the future lies in duping the consumer… Buy a “Comes With Music” handset and you get free, unlimited music downloads for a year. (Of course, they aren’t really free: the price of the handset includes a subscription fee that is passed to the record companies (see article). After a year, you can pay to continue to download new tunes, or you can buy another Comes With Music handset, with another year of free service. Thus consumers get their music; record companies get paid; and Nokia attracts and retains customers.

Hmm. We’ll see… Read the full article Economist on the music industry pricing systems here