As the market collectively holds its breath in anticipation of Facebook’s much (over?) hyped music service launch this coming Thursday, it is instructive to take stock of where we are at the moment to better understand the eager expectation.
Digital music is stuck in a rut
At the start of the year I made a speech at Midem, positing that digital music was at an impasse. Now, with the best part of a year gone, it still is. Granted we’ve had some important and encouraging developments (Spotify’s US launch and 1 million+ paying subs and Pandora’s IPO among them) but the fundamentals remain unchanged (see figure):
- Paid downloads are an Apple micro-economy not a marketplace. Despite valiant efforts from the likes of 7 Digital and Amazon, the 99 cent download just isn’t translating well outside of the iTunes ecosystem. Why? Because the tail is wagging the dog. iTunes downloads are an extension of i-devices not vice versa. The iTunes 99 cent download is effectively monetized CRM. Deep, elegant device integration is crucial for any digital music experience, especially so paid downloads. 7 Digital’s Music Hub build for Samsung’s Galaxy Tab is the sort of implementation needed, but both 7 Digital and the market as a whole need a much wider addressable base than Galaxies alone (retail embargoes notwithstanding).
- Premium rentals are an evolutionary dead-end. Despite Spotify doing a most admirable job of breaking the 1 million premium subscribers mark – which all other services had spent years failing to do – the fact remains that 9.99 rented music is a high-end aficionado market. Spotify have done a great job of building on the fantastic pioneering work of Rhapsody but in doing so they have developed the ‘faster horse’ that Henry Ford said his customers would have requested instead of the Model T if he’d asked them what they wanted. Rdio and Mog both have great user experiences but have struggled to make headway because the basic value proposition of 9.99 a month for rented music just doesn’t appeal to most consumers. Heck, 9.99 a month for owned music doesn’t even appeal anymore to most consumers anymore. Mass market consumers may be willing to pay much more than 9.99 a month on TV, broadband, mobile etc. but they won’t for music. It may not be pretty but this is the harsh reality that must be accepted. As far as music is concerned the contagion of free is legion and the best way to fight free is with free itself (or at least something that feels like free – see my previous post on subsidized subscriptions for more).
- Digital music is cluttered and complex. There is so much choice of catalogue and services that paradoxically there is no choice at all for consumers, unless you’re a savvy aficionado willing to wade your way through the clutter. Mass market consumers need the digital dots joining. Back in my days at Forrester I wrote about the need for 360 Degree Music Experiences, where the disparate parts of the digital music journey get pulled together by an interconnected ecosystem. The case for this is even stronger now.
Music: Facebook’s user lock-in
And this is where Facebook comes in. As I wrote earlier this year, it doesn’t make any sense for Facebook to try to ‘do a MySpace’ or for that matter to ‘do a Spotify’ or ‘do an iTunes’. Facebook is becoming a launch pad for our online lives just as Google is. But whereas Google largely gets us to places we don’t yet know, Facebook is what (and who) we do know. And in that lies a massive asset for digital music and an even larger platform for Facebook’s future growth.
I expect Facebook to join music’s digital dots and become a social dashboard for digital music activity. By plugging our music activity into our social graph Facebook can both enrich those services and tap into the tastes of our friends. The net result will be a richer digital music experience across multiple services and – most crucially for Mark Zuckerberg – one more reason why we’ll want to stick with Facebook when the Facebook-Killer finally raises its long overdue head.