OD2 Catch the I-tunes Wave

OD2 yesterday announced the launch of a new a la carte service that goes a long way to bringing Europe one step closer to the US. The new service gives a large nod of recognition to Apple’s I-Tunes service: offering a la carte downloads at €0.99. The service is important for two key reasons:

1 – it goes a long way to standardising the price of an individual downloads, which in turn will help stimulate consumer uptake. Due to differing demands from rights owners, prices of individual downloads have varied, making for a very confusing proposition to a would be online music consumer. Although €0.99 is still probably a little too high for a download (€0.75 is probably closer to the mark) the important part is that a consistent price has been arrived at. A further welcome development would be some further pricing initiatives to drive album purchases e.g. up to 40% discount if a complete album worth of tracks are purchased: this would drive overall revenues and consumption but also help offset cherry picking (a big fear of records labels)

2 – The service is packaged with Microsoft Windows Media Player 9. This gives the OD2 powered services potentially massive market penetration and should provide a massive boost to digital music revenues with many music fans dipping their toe in the digital music waters by buying occasional individual tracks.

At Jupiter Research we have just completed building our European Digital Music Forecasts and one key element that we factored in was a massively important role for a la carte services in the near to mid term growth of the market.

One interesting part of this development is what it means to Microsoft. Microsoft have quietly spent the last couple of years consolidating a market leading position in the digital music space, from a whole range of perspectives, but most notably DRM and the Media Player. Microsoft seems to have convinced most record labels that it is a) here to stay and can therefore be part of long term label plans, b) its technology is robust and reliable and c) it can be trusted with protecting content. OD2 are the only European DSP who have secured comprehensive major label licenses and it is no coincidence that their services are built around Microsoft technology. With Real networks increasingly focussing on developing their content businesses, Windows Media Player seems to have gained more ground, both in terms of installed base, but also as playback format of choice for many content providers. The one question mark this all raises for Microsoft though, is where the line between market leading and market dominance is seen to be by Mario Monti and his colleagues at the European Commission.

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