David’s Got It Right

David Hyman’s been around online music for about as long as anyone I know. He’s the founder and CEO of Mog, the blogging service for music lovers. He has a post about the future of music up on his mog that I completely agree with. Here’s the meat of the post in case you don’t want to click thru and read the whole thing.

Here’s what the labels need to do: drop that penny per track per
stream rate to about 10% of what it is today (that’s right – 1/10 of a
penny per stream). When that happens, the labels are meeting the market
and giving away music becomes lucrative; everybody and their brother
starts doing it. The labels turn all of online music consumption into a
revenue stream – every site with all-you-can-eat, on-demand music.
Thousands of sites innovate and create new value around how to discover
and consume music. By my estimate, that’s a $250 million per year
market for online ad spending alone.

Next, ensure that every streaming track links to the opportunity to download the track in mp3 (with Amazon
or whomever) and the labels have created the ultimate promotional
machine for mp3 purchasing (for the next 10 years, people will still
need to download for their portables and their car). Then slap on a
tempting upsell: offer users an ad-free, higher-bitrate subscription
service for a reasonable fee (say $5 per month). Suddenly the labels
have a shot at staying alive.

I’ll go one step further and suggest that while they are at it, they agree on an open api standard that allows connected devices (like sonos and squeezebox) in our homes to connect to these services. That’s a big opportunity just waiting to happen.