LOS ANGELES — There’s no more need to own songs before being able to listen to them at your convenience.
No more stacking your CDs on shelves or buying music to download onto computers and mobile devices. Virtually the whole world of recorded music is at your fingertips at any time, for a subscription, over the Internet.
Services that make this scenario possible haven’t proven very popular yet. But now price cuts and advances in technology could finally drive the idea to the mainstream.
For instance, Rhapsody International Inc. and Thumbplay Inc. now offer the ability to pick almost any song or album and play it instantly on a mobile device that connects to the Internet over cell phone networks. The services are $10 a month.
Justin Darcy, a 32-year-old sales director at a resort company in San Francisco, says he consumes so much music it would cost him $10,000 a year if he didn’t have a Rhapsody plan. He calls it “one of the greatest values in consumer goods I’ve ever come across.”
Given the obvious benefit of being able to listen to millions of songs as if they were in your personal stash, why haven’t services like these gotten more use?
Partly because of poor marketing, previously clunky execution and the fact that people are more familiar with compact discs and downloading songs from Apple Inc.’s iTunes music store. People who spend less than $120 a year on music also wouldn’t see the subscription plans as such a great deal.
But the music providers hope they can get more customers by making the services easier to use, taking advantage of increasingly robust cell phone networks to deliver the music. And in general, consumers are getting more comfortable using many kinds of services that rely on files stored on distant computers and accessed remotely, a concept known as “cloud computing.”
The subscription services have come down in price — they generally were $15 a month until recently — and broader adoption could push prices lower still. One big boost could come if Apple begins offering such a service. In December it bought an online music retailer called Lala.com that offers access to songs that users can store in a digital locker. Apple declined to comment on its plans.
The subscription services funnel royalties to recording companies, which are eager for new revenue streams to replace CD sales. That once-lucrative business has been declining for years as consumers have shifted to buying individual tracks or pirating music altogether.
“We are very bullish on the prospects of subscriptions over time,” says Michael Nash, executive vice president of digital strategy for Warner Music Group Corp.
One problem is finding the right price for the service and having as many people as possible sign up. If only hard-core music fans subscribe because it lets them reduce their spending, the music industry might end up cannibalizing its other sales.
Right now the median U.S. music buyer spends about $80 a year — not enough to make these new services a revolutionary deal, according to Sonal Gandhi, a Forrester Research media analyst. More than half of consumers don’t spend anything at all.
She predicts the number of U.S. subscribers for such plans will rise from 2.1 million now to 5 million by 2014. Why not more? Among other things, “not everyone wants to be tied to a monthly bill,” she says. One solution could be for wireless carriers to bundle a music subscription with their monthly services. Nearly 450,000 Vodafone customers in Europe signed up for unlimited access to 2 million songs last year when the plan was added to a wireless data package for 3 euros ($4) a month.
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