The OD2 powered digital music subscription services are getting a lot of media attention at the moment and in doing so have brought CD burning right up the agenda. Due to the licenses granted to OD2 by the major record labels, to burn a CD album’s worth of tracks a subscriber has to pay the equivalent cost of an actual CD album. This model clearly inhibits the potential of legitimate services.
The theory behind the tactic is to sustain the CD album model and to minimize potential cannibalisation of CD sales from online services. The nightmare scenario for record labels is for a subscriber to cherry pick his favourite 2 or 3 tracks from his favourite 4 albums and burn them on to one CD for, say, half the cost of a CD album. Thus reducing revenues by up to 90 percent.
But consumers already do that in the high street by buying compilation albums. Labels need to start being more creative about online licensing. For example, if a subscriber wants to burn more than half of the tracks from a single artist album then they get a 40% reduction on a 10 track burn package and further reduction if they opt for all. Burn packages could be offered as add-ons to a standard subscription fee. Using this approach the labels could keep the initial album burn cost relatively high but make burning complete artists albums real value for money, thus empowering legitimate subscription services to compete against file sharing networks.