All you can eat?

by on March 20, 2008 at 7:47 am in Music | Permalink

Allegedly tipped off by senior officials close to the matter, the Financial Times suggests that Apple is in talks with music labels to follow an approach first pioneered by Nokia and Universal Music Group.

Dubbed Comes With Music, the upcoming service has customers pay more for a cellphone in return for as many a la carte
music downloads as the customer likes over the course of a year. In
this implementation, customers can either renew a subscription once it
expires or else keep the tracks they’ve downloaded, even if they switch
to competing phones or music services.

Here is the article.  One point is that songs will get shorter and their best riffs will be held to higher standards of immediate accessibility.  If the marginal cost of a song is free, people will sample lots more and they will give fewer songs a second listen (higher opportunity cost); of course the opening bits of a song are already free in many cases but this will make sampling even easier.

Second, this will redistribute more of the market surplus away from song providers and toward hardware providers.  Say everyone bought the "all you can eat" version and Apple received zero revenue per song (there are few songs that will swing a decision to subscribe or not).  TAddendumhat helps Apple in its bargains with individual song providers.  If you have a hit song, and Apple controls iTunes, there’s an element of bilateral monopoly.  So Apple is better off if it can precommit to not caring whether they have your song or not.  On the music company side, there would be a tendency toward consolidation, and bargaining over catalogs rather than songs, to offset Apple’s new bargaining advantage.

What other effects can you think of?

Addendum: Some sources are claiming this is just a rumor.

1 David shor March 20, 2008 at 9:12 am

Since the cost of the subscription does not fluctuate depending on demand for music(In fact, because of the huge number of parties approval necessary for a change in prices, prices won’t move much at all), overall music production will be out of sync with the theoretical societal optimum(though this is arguably true of the current system a well).

2 Alec van Gelder March 20, 2008 at 11:01 am

When has the marginal cost of a song ever been free?

3 Carlos D March 20, 2008 at 4:32 pm

The bit about ‘giving fewer songs a second listen’ doesn’t necessarily take into account what free illegal downloads have taught us.

Fans who have already figured out how to consistently get free illegal music have a higher standard for their attention spans and as such are usually more vulnerable to critics and hype.

Once the hype cycle gives way to a first listen, it’s definitely strong enough to entice a second listen in order to try to understand the hype. This kind of music consumption cycle has existed on the internet for years and I definitely believe will penetrate the mainstream.

Notice how ‘indie’ artists with substantial blog and critic chatter are illegally downloaded just as much or at least close to as often as music that sells many, many more copies than it.

In conclusion, I find your idea that music will be more shallow and immediately affecting to be very short sighted. Online media sources are so plentiful that the music they recommend must maintain a much higher critical value than that of a radio station. As a result, look for mainstream music to actually become more intelligent.

If this happens, you heard it here first.

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