Continuing my bid to provide more fuel for the ‘music should be free’ fire this is the second in my short series of ‘Music Myths, Misconceptions and Mistakes’ posts, tackling one big ‘free’ issue at a time. Today’s topic is Ad Supported (yesterday’s post on File Sharing can be found here).
Ad Supported: 10 Mistakes, Myths and Misconceptions
- Myth: All music will be free and supported by advertising in the future. There simply isn’t enough online ad revenue to go round. In 2007 the entire European online ad market was exactly the same size as the entire European music market (€ 7.7 billion)
- Mistake: Charging the 1st generation of ad supported download services too much for their licenses Qtrax and Spiral Frog clearly have their flaws but they were further impeded by excessively high rights fees. Ad supported rates need to sit somewhere between radio and premium download rate levels, skewed strongly to the former.
- Misconception: Spiral Frog and Qtrax flopped, Ad Supported is dead. A) first movers rarely win, early followers typically do, so wait for the next breed B) where downloads have stumbled streaming has flourished cf MySpace in the US, Last.FM, imeem
- Misconception: Ad supported downloads will cannibalize premium downloads pt1. Users of ad supported download services tolerate restriction on use, sound quality, catalogue etc. in return for no fee. Most of those willing to pay do so because they want the quality etc. Otherwise they’d file share.
- Misconception: Ad supported downloads will cannibalize premium downloads pt2. Apple owns 80% of the premium download market. Ad supported download services aren’t compatible with iPods.
- Misconception: Ad supported streaming weakens the premium download market. Last.FM, imeem etc are entirely complementary to premium downloads, indeed one could argue they have a symbiotic relationship with premium downloads
- Mistake: Trying to charge for streaming music. Ad supported streaming does though, destroy the market for premium streaming services such as Napster and Rhapsody. These services need a fundamental rethink e.g. 100% DRM-free for an upfront annual fee.
- Mistake: Excessive restrictions on number of plays per artist per hour etc. DMCA restrictions on ad supported streaming confuse online with traditional radio are ignorant of the fact that online is an on-demand medium. Ultimately the playground should level so that there is one broad category of on demand streaming alongside pure simulcast radio
- Myth: Consumers won’t buy music anymore if they listen to ad supported streaming. The social music services actually drive music discovery and purchase. Last.FM has strong affiliate relationships with iTunes etc
- Myth: Apple will launch an ad supported streaming service integrated into iTunes and iPhone and iPod touch, using Genius to drive Audio Scrobbler-type functionality. This is one myth I hope comes true J