Bob Lefsetz in a post last week slated Myspace music and its major label partners attempt to build a proposition, which may be aimed at taking the digital music retailer monopoly status away from iTunes. Firstly I would like to know does Lefsetz support a monopoly? As iTunes is a monopoly under both the definition of EU as well as US competition laws with more than a 65% market share. Has he asked his own US government why they have not acted to rectify this clear breach of the United States own competition legislation?
Lets get something straight, and that is iTunes rules the current digital music retail space for three key reasons:
a.) It was first to market (for legal downloads)
b.) The iTunes interface is sexy and beats all current competition
c.) It fought against opening up its IP to prevent interoperability between other legitimate
digital retailers and hardware manufacturers. This prevented new retailers from selling music that
could be played on the iPod and also prevented tracks purchase from iTunes being easily
transferred to be played on different MP3 players.
Points a.) and b.) are all fine and dandy but lets be very clear, the primary reason iTunes has still been able to hold onto its monopoly status is noted in point c and that is because of Apple’s blatant anti-competitive behaviour reminiscent of Microsoft tactics in the late 90s. In many ways Apple has acted like the corporate bully that is Microsoft.
If the iPod ecosystem was opened up, as it should have been do you not think that legal sales of digital music via alternatives to iTunes would have improved and that would be good for the industry as a whole? I’m sure no one in the industry believes that one company owning a monopoly stake in both sides (retailing and hardware player) of the digital music retail ecosystem is healthy for all parts of the music business value chain?
Yes Myspace music and the social network generally are based around the advertisement-funded model. Show me a web 2.0 music model that is not based around advertising. What is Bob’s problem with that? It will provide a legitimate route for music fans to get their music for free. Due to its large user base of over 110 million regular users, Myspace music will have a very real chance of taking on the digital music retail monster that iTunes is.
Lefsetz states that if the record labels are going to have to do two things to leap in front of iTunes they are; lowering the digital retail price of music and to ‘deliver more cluck for the buck’. Myspace music is attempting to deliver on this by taking out the whole price proposition by offering it for free to consumers as opposed to the a-la carte price music iTunes retails. So where is the comparison? Even if they offer all models ad funded, al-la carte and possibly subscription what is the problem with that?
On the interface front (pun intended), iTunes, and all of Apple’s hardware products do set the standard in terms of UI. Constant raising of the bar in terms of exceptional user experience is a good thing and helps drive competition in terms of furthering the end user experience. Just because Apple is the leader now, does not mean it will be in the future.
I do agree that the Myspace interface is nowhere near as sexy as it could be. That does not mean it will not improve over time. The key reason why I view Myspace music as the only key potential competitor to iTunes is simply down to its large user base, the fact it still is the global first point of call web destination for artist music sites (signed and unsigned). Furthermore its USP is music for free, funded by advertisements. Oh and it is actually a ‘partnership’ between the four major labels and Myspace – a deal with the indies is also in the pipeline as well. Yes there are certain issues that require fine-tuning, but they will be ironed out.
Drilling down, I agree the key issue is that labels and reporting transparency is of paramount importance and perhaps requires collective leveraging from both digital retailers and artist’s representatives all insisting on an increased level of reporting transparency to music creators such as artists and song writers.
On a final note I will end in agreement that subscription and labels moving towards an ARPU based retail model will have a key part to play in the future evolution of the retailing of music in the digital realm. Moving forward I do view mobile as the panacea for this proposition.
The music business has been trying out new business propositions for a number of years now. However the ROI on advertising funded and subscription models to date have so far left a bad taste in-both, labels, publishers and most importantly artist’s mouths – whether that is eMusic, Napster or Omniphone models to name a few. So Bob labels have been doing and are continuing to try new business propositions, just ones you are not very keen on.
For those that have not read the post by Bob Lefsetz that I refer to above, you can check it out here.
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