HMV to Sell Digital Downloads

An anonymous reader writes "Sales of digital music downloads on sites like PressPlay and MusicNet have been a bust so far and for good reason. They cost too much, have too many restrictions and the palette of music you get to download is too limited. They have almost nothing to offer over what the various P2P networks give you for free. So why do record chains like HMV want to get in the game? Simple, these services cut out the middlemen and if they should ever succeed record retailers would be left out in the cold. Research shows there is a percentage of consumers who will pay for digital tunes if the conditions are right. They aren't now, but market forces will push them to improve the terms or die. PressPlay has already capitulated to some of these limitations. To protect their interests in the long term, retailers like HMV and Tower records have jumped on board and signed on with On Demand Distribution (OD2) - a company co-founded by Peter Gabriel to be a wholesaler of digital music tunes - to provide the music and the back end to their new services. HMV's service launches in September at five pounds at month (about 7 bucks), a price point which will mean nothing if the song selection sucks."

Comments

The times they are a' changin

[Sivar]

Somebody out there actually realizes that the current music business model will eventually fail. How refreshing it is to see intelligence in corporate America once more.

ugh...subscription models

[mikeboone]

I hate the concept of subscription models. All of these services want to rope you into month after month of fees. Everyone from Microsoft to music wants the luxury of a constant income stream.

I don't buy CDs every month, why would I pay to download songs every month? Same goes for software.

Let me come in, buy one or two songs for a buck (and give me my fair use rights to them), and maybe I'll be back in a couple months to spend more.

Re:ugh...subscription models

[Dark Paladin]

I agree. My wish list is very simple (see Janis Ian for more - and if you have the link, post it, 'cause I lost my bookmarks :) ).

• Downloads MP3's from 64 to 320 bit encryption; costs increase for quality. Now I can put them in on my iPod if I want.
  
• Cost: $1 or $2 per song, do bulk sales (like an entire "album" is $10, or each song is $2).
  
• Statement that 33% of revenue from song sales goes to the artist, 33% to the writer, and 33% to the distributor (and no cheesy "we're charging the artist $0.50 per song for recording/distribution costs).
  

If they did this, I estimate 75% of the peer to peer music systems (Gnutella, Kaaza, etc) would drop in traffic as people could get the music they want cheap, available, and useable.

Most of the plans I've seen (like those from Sony) are either only for streaming music (blech - like I'm going to sit in my fucking car streaming music), or require proprietary solutions (like "Must have Windows Super DRM Protection Version").

HMV sell region-free DVD player....

[anonymous cupboard]

HMV are interesting, they publish music but they also retail it and have quite a big retail chain inEurope (Ibelieve they are also linked with Virgin Records as well now). Of course this means they are in the middle of the music-sharing etc. disputes. An interesting fact is they seem to be selling region-free DVD players in their retail outlets and, most importantly, advertising the fact.

What this means is they are not automatically either RIAA or MPAA friends. Good luck to them.

The reason? Market survival

[Chairboy]

Digital music downloads is what's known as a 'Disruptive technology'. Every industry has disruptive technologies that, when they appear, are not as good as what is currently in place, but end up improving to a point where they replace the original sustaining technology.

An example of disruptive technology is the 8" hard drive. The 14" hard drives were fast and stored a lot of data, but few of the disk companies bothered to make 8" drives when they came out because they were slower and didn't store as much data. Not only that, but they cost more per megabyte. But the market for Minicomputers demanded lower cost (even if it was higher cost per meg) overall drives, so they started improving. Only one or two hard drive companies from the 14" market survived the switch to 8" drives because they didn't see the benefit, and their customers didn't either, until it was too late.

The same thing happened again when the 5.25" HDs came out. Only a couple manufacturers of 8" drives stayed in business, and only because they spent money on the 5.25" drives well before they were good enough to sell, or profitable.

Finally, look at the excavating market: Up until the 1940s, steam shovels were all cable activated. They used cables to lift the arms and control the scoop, not hydraulics. When the first hydraulic dirt movers came out, they couldn't move anywhere near as much dirt and they cost more to operate, but eventually they became more powerful, safer, and cheaper to own and operate then cable operated stuff. NONE of the steam shovel companies that were in business in the 1940s survived past the 1950s because they didn't see the benefit of selling what they saw as inferior technology, which hydraulics definately were in the beginning.

This created opportunities for the startups to dominate the small hydraulics market unopposed until they were able to grow into and take over the domain of the cable operated steam shovel.

What HMV (and these other companies) are doing is learning from the mistakes of those companies. Digital music download is a disruptive technology to the sustaining technology of physical music purchase. It's not as high quality as CDs now, and it has lots of deficiencies, but they know that eventually, the market for digital downloads of music may grow to compete with and even replace physical media sales. That's not what customers want right now, but the market and technologies change, so 5-10 years from now, customers will demand this, and whoever is in the business first will have lots of advantages.

Remember, what the customer wants is not always best, and if you spend your life following the customers requests only, you'll eventually go out of business when a disruptive technology appears. It happened to the 14" drive manufacturers who listened to their customers (who weren't interested in slower, lower capacity drives), and it'll happen to the music industry that doesn't embrace and extend downloads.

For more data on this, read 'The Innovators Dilemma' by Christensen.

Re:Just don't get it...

[realgone]

As I've said many times before, a really good alternative for them would be building computerized kiosks that let the customer burn his/her own selection of songs onto a high-quality CD - and pay for it by the song. (Probably by taking a resultant printed receipt up to the counter/checkout lane with the shiny new disc)... I would think most retails stores would absolutely love this idea, as would consumers who can finally buy their own "custom mix" CD

Actually, something along thess lines *was* done before, way way back in the early 90s. A company called Personics set up custom mix-tape kiosks in Sam Goody and other chain music outlets. And yes, the retailers LOVED it. And, yes again, the labels HATED it, ultimately killing the project by holding back licensing on popular songs. You can read about the whole sorry tale here.

And for the record, I did make heavy use of these machines back in high school. I'd create mix tapes by a dozen bands I was curious about but hadn't yet heard -- the Sugarcubes, let's say -- and come back later to buy full albums by the bands I ended up liking. (Mind you, this was before the popularization of both the Internet and in-store "try-before-you-buy" listening.) Pretty much the same thing a lot of people use Kazaa/Gnutella for today -- a sampler platter. And the labels would opposed a CD-based version for all the same reasons.

Shame, really...

It's such an easy concept...

[Mulletproof]

All you have to do is play off the weaknesses of the current p2p models and they'd be set. Lord knows their's plenty of them.

1) Consistent high download speeds.
2) What you see is what you get downloads, ie; ensuring their quality (no cracks, loops, hiss, bogus files, etc).
3) Stable downloads. No "need more sources", "qued" and all of that BS.
4) No sideband search traffic or p2p downloaders sucking up my bandwidth.

The only reason why we use p2p is because it's the only option anymore, not because it's good. But to these three, you have to add:

5) Downloaders rights. You pay for a song/subscription, it's yours to copy, burn, etc. Some services erase your archive or it becomes useless if you quit their service. Funny, but I don't see the repo man coming after my T3 magazines if I don't renew. I bought it, it's mine.

If you combined these with a reasonable download price, and maybe some extra goodies thrown in for your patronage, then I'm betting you'd actually have a snowballs chance of grabbing a large share of the legal market. It'll happen eventially, but damn, they are seriously behind the curve.