Saturday, October 13, 2007

Universal Music short on ideas to take on iTunes

Universal Music has plans to allow vendors of digital music players to bundle unlimited downloads of its music for free to users, according to a report in BusinessWeek.

Universal will make its money by charging the device makers for the monthly subscriptions to the music. Makers of music players and mobile phones may then have a decent chance to overthrow iPod’s dominance of the digital music player market, as they can package downloads from Universal’s vast inventory of titles, as well as potentially from Sony BMG Music Entertainment and Warner Music Group, the report suggests.

But the deal is not likely to be a threat to the iPod any time soon. I doubt users are going to buy a second tier device just for the free music, even if it is “all you can eat”. Music fans want the entire experience – that is a good player with excellent music.

Currently the iPod is perceived to be the best player, and a strong iconic brand as well. Users have put up with a lot of crap from Apple Inc., including its various proprietary locks, but that is because they love the iPod.

Consider the figures. Apple had sold over 100 million iPods from the product’s launch in 2001 to April this year. In contrast, for all its marketing muscle, Microsoft Corp. has sold only 1.2 million units of its Zune since November. Will free music downloads change that ? I doubt it.

It is also not clear whether Universal’s Total Music will be free of DRM (digital rights management). If it is, the music is more likely to be downloaded for Total Music devices, and end up getting played by iPods users who never paid for the devices or the music. To avoid that, device makers will certainly insist on some kind of DRM. That will most likely mean that this music won’t play on iPods, and yes the non-DRM music on iTunes will not play on these devices. Once again the outcome will be fragmentation and chaos.

Universal, Sony BMG, and Warner Music are better off setting up an online store for non-DRM music of their own, that offers the basement rates the companies are willing to offer device makers. That way, like eMusic, another digital music download service, the music labels will have access to iPod users as well as users of other devices.

Related articles:

The Internet helps RIAA squeeze profits
Finding gold on the Net is a long shot

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