Bruce Willis and the ‘When Owning Doesn’t Actually Mean Owning’ Conundrum

Bruce Willis is reported to be considering legal action against Apple to enable him to bequeath his sizable iTunes music collection to his children.  Whether there is basis in the story or not it shines an unforgiving light not so much on Apple’s terms and conditions but the role of copyright in consumer music products as a whole.

Analogue Era Copyright Restrictions Rarely Left the Realms of Small Print

The issue at stake is that iTunes terms and conditions prevent the original purchaser from giving the purchased music to someone else. But this is not something unique to iTunes, it applies to virtually every single piece of music product that you have ever bought (assuming you have bought some at some time or another).  And not just to downloads, but also to CDs, vinyl, cassette, MiniDisc and just about any other physical format you care to throw into the mix.  With each and every one of those music product formats that you have purchased, all that you actually own is the physical packaging and media, and a license to play the music inside it.  You do not own the music.  And the licenses come with pretty specific restrictions, often including the number of people that are in the room when you are playing it, though the exact number of people who are allowed to listen to music in your living room is defined by national statute.  The restrictions also cover copying, lending and selling.  Of course (personal) copying, lending, listening at parties, gifting and buying used albums have all been integral parts of the music experience for decades.   People simply enjoyed the music how they wanted to regardless of the restrictions, many of which they simply were not aware of.

Take a look at the small print on the back of a CD album – if you still have any – and you’ll see a copyright notice.  The exact wording will vary according to the label and the country of origin or sale, but the same underlying principle applies across all of them: you don’t actually own the music on the album, instead you have bought a license to play that music.  In the physical era people rarely bumped into these restrictions, but in the digital age labels and other rights owners have the ability to enforce them through technology.

So should Bruce Willis really prove to be tilting at iTunes’ windmills, it will be decades of global copyright convention and practice that he will in fact be facing, and any potential judge will be made keenly aware of this.  Which raises the stakes in quantum leap proportions and builds a case for the industry to come up with common sense business solutions before the entire music copyright edifice is challenged.

It is Time for a Business Solution to the Copyright Problem

Copyright is the critical tool for monetizing content and ensuring creators and originators are fairly compensated.  But copyright is at its best when it serves those purposes without placing impractical and unreasonable restrictions on consumers.  Paying music fans are becoming an increasingly self-selective group.  In the analogue era most music fans were also recorded music buyers.  In the digital age music fans often opt out from music purchasing entirely.  Thus when analogue-era copyright legacies affect digital music buyers, it is the valuable, opted-in part of the population that is being penalized, not the freeloading opted-out portion.  A situation which of course has already happened once before online, with rights owners’ earlier insistence on all downloads being shackled with DRM.

 

The indies, and then EMI and iTunes finally broke the DRM hoodoo and one would hope that a similar outcome could be achieved here.  Changing the underlying copyright frameworks and agreements is not going to happen either soon or quickly, but just as DRM was solved with business decisions, so could the issue of transferring ownership of purchased music.  Rights owners and digital music retailers could create a framework agreement to permit certain behaviours within specific parameters or could simply agree to turn a blind eye in certain scenarios.

It would be copyright suicide to suggest that a music customer could ‘give’ their music to anyone they so choose, because a single digital copy can always be legion.  But a ‘fair use’ approach which supports a number of scenarios, such as Willis’ desire to bequeath to his children, would be an eminently workable solution.

Copyright should protect rights but not at the expense of penalizing legitimate customers over those who don’t bother to pay at all.

The Music Format Bill of Rights

Today I have published the latest Music Industry Blog report:  ‘The Music Format Bill Of Rights: A Manifesto for the Next Generation of Music Products’.  The report is currently available free of charge to Music Industry Blog subscribers.  To subscribe to this blog and to receive a copy of the report simply add your email address to the ‘EMAIL SUBSCRIPTION’ box to left.

Here are a few highlights of the report:

Synopsis

The music industry is in dire need of a genuine successor to the CD, and the download is not it. The current debates over access versus ownership and of streaming services hurting download sales ring true because a stream is a decent like-for-like replacement for a download.  The premium product needs to be much more than a mere download.  It needs dramatically reinventing for the digital age, built around four fundamental and inalienable principles of being Dynamic, Interactive, Social and Curated (D.I.S.C.).  This is nothing less than an entire new music format that will enable the next generation of music products.  Products that will be radically different from their predecessors and that will crucially be artist-specific, not store or service specific.  Rights owners will have to overcome some major licensing and commercial issues, but the stakes are high enough to warrant the effort.  At risk is the entire future of premium music products.

D.I.S.C.: The Music Format Bill Of Rights

The opportunity for the next generation of music format is of the highest order but to fulfil that potential , lessons from the current digital music market must be learned and acted upon to ensure mistakes are not repeated.  The next generation of music format needs to be dictated by the objective of meeting consumer needs, not rights owner business affairs teams’ T&Cs.  It must be defined by consumer experiences not by business models.  This next generation of music format will in fact both increase rights owner revenue (at an unprecedented rate in the digital arena) and will fuel profitable businesses.  But to do so effectively, ‘the cart’ of commercial terms, rights complexities and stakeholder concerns must follow the ‘horse’ of user experience, not lead it. This coming wave of music format must also be grounded in a number of fundamental and inalienable principles.  And so, with no further ado, welcome to the Music Format Bill of Rights (see figure):

• Dynamic. In the physical era music formats had to be static, it was an inherent characteristic of the model.  But in the digital age in which consumers are perpetually online across a plethora of connected devices there is no such excuse for music format stasis.  The next generation of music format must leverage connectivity to the full, to ensure that relevant new content is dynamically pushed to the consumer, to make the product a living, breathing entity rather than the music experience dead-end that the download currently represents.
• Interactive. Similarly the uni-directional nature of physical music formats and radio was an unavoidable by-product of the broadcast and physical retail paradigms.  Consumers consumed. In the digital age they participate too.  Not only that, they make content experiences richer because of that participation, whether that be by helping drive recommendations and discovery or by creating cool mash-ups. Music products must place interactivity at their core, empowering the user to fully customize their experience.  We are in the age of Media Mass Customization, the lean-back paradigm of the analogue era has been superseded by the lean-forward mode of the digital age.  If music formats don’t embrace this basic principle they will find that no one embraces them.
• Social. Music has always been social, from the Neolithic campfire to the mixtape.  In the digital context music becomes massively social.  Spotify and Facebook’s partnering builds on the important foundations laid by the likes of Last.FM and MySpace.  Music services are learning to integrate social functionality, music products must have it in their core DNA.
• Curated. One of the costs of the digital age is clutter and confusion: there is so much choice that there is effectively no choice at all.  Consumers need guiding through the bewildering array of content, services and features.  High quality, convenient, curated and context aware experiences will be the secret sauce of the next generation of music formats. These quasi-ethereal elements provide the unique value that will differentiate paid from free, premium from ad supported, legal from illegal.  Digital piracy means that all content is available somewhere for free.  That fight is lost, we are inarguably in the post-content scarcity age.  But a music product that creates a uniquely programmed sequence of content, in a uniquely constructed framework of events and contexts will create a uniquely valuable experience that cannot be replicated simply by putting together the free pieces from illegal sources.  The sum will be much greater than its parts.

Table of Contents for the full 20 page report:

Setting The Scene

• Digital’s Failure To Drive a Format Replacement Cycle

Analysis

• Setting the Scene
• (Apparently) The Revolution Will Not Be Digitized
• The Music Consumption Landscape is Dangerously Out of Balance
• Tapping the Ownership Opportunity
• The Music Format Bill Of Rights
• Applying the Laws of Ecosystems to Music Formats
• Building the Future of Premium Music Products
• D.I.S.C. Products Will Be the Top Tier of Mainstream Music Products
• The Importance of a Multi-Channel Retail Strategy
• Learning Lessons from the Past and Present
• We Are In the Per-Person Age, Not the Per-Device Age

Next Steps

Conclusion

Why Rhapsody Needs More Than Just Napster To Flourish

Rhapsody yesterday announced the acquisition of long term rival Napster from US retailer Best Buy.  Rhapsody will retire the Napster brand and migrate the customer base over to its own service, with Best Buy gaining a minority stake in Rhapsody. It is a somewhat poignant end to one of digital music’s old guard, going out with a whimper rather than a bang.

The acquisition will give Rhapsody an important boost in scale at a pivotal time, namely as Spotify aggressively grows its US subscription business and simultaneously disrupts the entire market with its introduction of free on-demand music to the US market (a ship which of course MOG and Rdio are also busy jumping on).

When 2+2=2.5

In the near-term the Napster acquisition will put more clear water between Rhapsody’s subscriber count and Spotify’s.  It should also grant Rhapsody membership of the the ‘1 Million Club’, with its 800,000 subscribers swelled by a few hundred thousand from Napster.  The last time Napster reported their numbers in December 2008 they had 700,000 subscribers.   After three years in the Best Buy wilderness and shifts towards bundled download products I estimate there to be no more than 400,000 fully fledged subscribers left, probably more like 300,000.

But Rhapsody will be keenly aware that even keeping hold of just 300,000 subscribers will be no mean feat. They will remember keenly the 2008 acquisition of Yahoo! Music’s 400,000 subscribers and their rapid disappearance into the ether.  Napster will also recall the similar magical disappearing trick of the 350,000 AOL Music Now subscribers they acquired in December 2007 for $43 per subscriber.  In the business of acquiring music subscribers 2+2 too often = 2.5.

Rhapsody’s President Jon Irwin said of the acquisition that “scale is extremely important in this business.”  He is of course entirely correct.  Rights fees leave little in the way of margins.  For sake of full disclosure I’ve been a very long term fan of Rhapsody, right since their earliest days. It was partly our experiences of Rhapsody that led myself and my former colleague David Card to be so bullish about music subscriptions when we were helping build the Jupiter Research digital music forecasts.  But the time has come for Rhapsody not just to change but to drive change.

The digital music market is a different world from that Rhapsody was built for.  Unless Rhapsody wants to be limited to spending the next year or two simply trying to stay one subscriber ahead of Spotify it needs to overhaul its product roadmap.

Rhapsody needs unlimited MP3, now!

I’ve long advocated that if the record labels really want to ensure the extant premium subscription services don’t become extinct that they must empower them with dramatically more powerful licenses: namely unlimited MP3.  Of course it will be a good year or two more of global music revenue decline before the labels hurt enough to really countenance unlimited MP3, but Rhapsody needs it now.

So what can Rhapsody do in the meantime?  Well they’ve already got great discovery and editorial etc. so it is not really the experience they need to fix, rather the entire value proposition.  They need to ask themselves ‘what do we want to mean to consumers in the Spotify age?  What can makes us dramatically and unmistakeably different?’  Unless they can really address this fundamental question Rhapsody will face the very real prospect ending up looking like Spotify’s stuffy old uncle, which would be a criminal insult for the Grand Old Lady of digital music.

The Socially Integrated Web and Facebook’s Content Strategy

Click on the video below to view my latest Music Industry Blog podcast.  This episode addresses the Socially Integrated Web, the term I use to describe Facebook’s content strategy.

Topics covered in this episode include:

• Joining users’ digital dots
• The four types of digital content ecosystems
• How Facebook will extend its ecosystem reach
• The universal content dashboard
• What will happen to content companies that integrate with Facebook

iTunes in the Cloud: A Great Start, But Just That

So Apple finally launched their much anticipated cloud music service, and they didn’t disappoint. At least by cloud-locker standards they didn’t. But I wanted more, a lot more.

Here’s my quick take on what Apple launched and where I think they should go next:

Automatic Downloads

What is it? Enables iTunes buyers to transfer music purchases to any iTunes supported device of songs that you have bought from iTunes.

How much of a big deal is it? This is a welcome move, but one that really should have happened long ago, and it’s entirely not Apple’s fault it took so long. The music industry still thinks of digital music on a per-device basis. But restricting the devices people can take their purchased music on only weakens legal services when compared to illegal ones, which of course have no such qualms. Thinking of music consumption on a device basis rather than a person basis is simply the wrong worldview and it needs to change, fast. Automatic Downloads are nice move towards a new way of thinking, but of course within the tightly controlled confines of the iTunes ecosystem.

iTunes Match

What is it? Matches your music collection against Apple’s cloud catalogue and upgrades your music to 256 kbps AAC, all for $24.99 a year.

How much of a big deal is it? This is the sort of locker service Amazon and Google *should* have launched. Instead of having to painfully upload your entire music collection you simply need to scan and match, a process which should take a matter of minutes. It makes a cloud collection a seamless extension of your local collection.

Mulligan’s Take: With these simple but elegantly executed features Apple has created a best-of-breed cloud / music store combination that makes much of the competition pale by comparison. Apple has done what Apple does best: it has let the competition move first, learned from their mistakes and launched a better product. And yet it is it enough? Apple have done more than enough in terms of the current cloud-storage debate, and this is a clear shot across the bows of Google and Amazon’s burgeoning digital music ambitions. Also, make no mistake, Apple will have worked hard to get what they have from the rights holders to get this service to market. But it doesn’t do half as much as it could do, to move the digital music conversation on beyond the ‘distraction’ of locker services.

Locker services – in iTunes Match form – should be part of every digital music service, just like there should be a play button on every MP3 player. But they are just that: a feature not a service. If the music industry is going to take big strides forward over the coming years it needs more than locker services, much more. It needs rich, interactive and social music services that make people fall in love with the power of digital music again. In the context of iCloud that would mean:

• On-demand streaming of music you *don’t* own
• Monthly iTunes purchase credits which (unless you specify otherwise) automatically convert into purchased downloads of the songs you played most last month but didn’t own
• Subscription costs bundled into the cost of Apple devices at point of purchase
• Ping!, Genius, Twitter and Facebook deeply integrated to create a truly social music consumption and discovery experience
• Limited Garageband and iMovie functionality integrated to enable mash-ups

That is of course a lengthy wish-list and one that won’t be fulfilled anytime soon. But nonetheless that is the sort of thing the record labels need to encourage Apple, Google and Amazon to build over the next few years if they are going to get digital music out of its current impasse.

Comes With Music Finally Gets Its Route To Market

Orange today announced they will be ‘exclusively’ providing Comes With Music on the Nokia 5800 in the UK.  Finally Nokia’s Come With Music gets the route to market it needs.

I’ve long been a strong advocate of CWM and that belief remains intact despite reportedly poor sales to date.  Nokia always needed strong channel partner participation to make the service a success. Without the route-to-market, marketing support and – most crucially – subsidy support that the operators provide CWM is left looking like an overpriced, under featured oddity.  But with the support of an operator it comes into its own.

Orange packages start at just 25 pounds a month.  For this consumers not only get a decent number of voice minutes and texts, but they also get the handset for free and unlimited music that they get to own for ever.  That is a compelling proposition and offers genuine value for money. Unsubsidized, the cost in Italy for the same handset and music service, but without a voice and text tariff is just short of 500 Euros.  The comparison is stark and is central to why CWM has under-whelmed thus far.

CWM is an exciting product because, when packaged correctly, looks and feels like free to the consumer.  In this context DRM restrictions and a phone that falls short of iPhone sexiness are entirely tolerable.  But with a premium price point they become non-starters.

CWM, along with the likes of Spotify, We7, Last.FM and imeem, is one of the key weapons that the music industry has in its armoury to fight free with free itself.  CWM may not be free, but packaged like this it ‘feels like free’ and that’s enough to have real potential of pulling young music fans away from illegal downloading on a scale that hasn’t yet been achieved.

What the ISPs and the Record Labels Need to Do Next

The UK music industry and ISPs have been working towards the goals of the government-brokered Memorandum of Understanding since last summer but we’ve yet to see concrete results, in particular with regards to new music offerings. All stakeholders recognize the crucial importance of having a big fat carrot to accompany the stick. Yet we still seem to be some distance from the ISPs being empowered with truly compelling music services they can offer to their subscribers as a genuine alternative to file sharing.

On the surface of things this week’s reported tie up with Sky and Omnifone for a music subscription services seemed like a positive step forward. However, the lightest of scratches beneath the surface reveal it to actually be a microcosm of broader problems. Omnifone’s press announcement pointedly doesn’t even mention Sky as a partner for their new ISP white label offering. Although many press reports imply Sky have signed up, the only actual substance is that Sky are considering using Omnifone to power some of the technology on its offering.

The nuanced specifics here are important. Last year Sky and Universal Music proudly announced a music JV. Details were scarce in the extreme but the strategic ambition was bold. Sky has since then not been able to add any of the other 3 majors onto the JV roster. Part of this may well relate to the other majors getting increasingly narked about UMG’s highly proactive (even aggressive) digital strategy. But more broadly it talks to the fact that there is a lot of distance between what Sky wants to be able to offer its customers and what the labels feel they can provide for the financial terms Sky are willing to consider. This follows on the heels of Virgin Media dropping pursuit of PlayLouder’s MSP offering due to label concerns and also 7Digital so far failing to get any ISP to take up their white label offering.

The root of the problem is that the ISPs want to offer consumers more content and flexibility for less money (and pay the labels less) than the labels are willing to countenance.

But most UK ISPs have good reason for having high demands, as do many other continental European ISPs. They’ve been burnt once, launching poorly featured, weakly differentiated services near the turn of the century. Their inadequacies (and the subsequent failures) weren’t the fault of the ISPs per se, rather they were products of their time, restricted to the terms that the major record labels were willing to countenance back then. (e.g. 99 cents downloads that could only be played on your computer)

Apple changed the rules of the game and the failings of the ISP services were only accentuated.

The ISPs know now that if they get back in the game they have to be differentiated and be able to compete with Apple. But they also know that most of their file sharing subscribers are unlikely to be able or willing to pay much either. So the ISPs want compelling (ideally MP3) services that cost little or nothing to consumers. The labels business models can’t support that model without the ISPs picking up a lot of the cost, which they can’t afford to do due to falling broadband ARPU.

So we’re in a stalemate that nobody really expected to be in. (Indeed back in the summer of last year BMR CEO Feargal Sharkey said he expected to have something to announce “within a matter of weeks”). The labels thought the ISPs would lap up what they had to offer, and the ISPs thought they’d get more. The record labels are not about to change the fundamentals of how they value their IP, but there are some viable mid term compromises that can get us out of this malaise:

• A series of Joint Ventures: MySpace have created a blue print for using this approach to get favourable licensing terms to deliver free music that wouldn’t have been financially viable otherwise. And the labels get lots of potential upside and to extend their role in the value chain. JVs would bind the ISPs and labels closer together, create common purpose and engender greater strategic flexibility.
• Focus on free, not MP3: the success of Spotify has shown that MP3 isn’t everything. Free music streaming with good catalogue and easy to use UI is actually a winning formula. The business case for hiding the cost of a streaming service in the access subscription is a lot stronger than for MP3 downloads
• Leverage all elements of the multiplay: ISPs typically have multiple products (TV, mobile etc.). Fully leverage these. Creating a compelling music offering means going beyond a balkanized online vs mobile vs TV strategy. Fully integrate and actually drive other business areas in the process e.g. extending a streaming music offering to mobile via an on-handset app will drive mobile data usage

Time is of the essence: every day that goes by, file sharing grows in popularity and becomes more entrenched. So agreeing on intermediate solutions with a view to a longer term roadmap is far favourable to stalling until the perfect solution can be agreed upon.

Apple iTunes Music Store (Finally) Goes DRM-free: First Take

So finally Apple gets DRM-free across all of its music catalogue on the iTunes Music Store (80% now, 100% end of Q1). It’s late, not too late but non-the-less late. As Apple accounts for the vast majority of the paid download market we can talk effectively talk about the impact this will have on the broader digital music market rather than just on iTunes sales.

Don’t expect it to kick start the digital music market (which is worryingly sluggish). This is just a basic enabler the market needs for long term viability. It is, however, crucial for future differentiation of the next wave of digital music services. Subsidized and ad supported services such as Qtrax and Nokia’s Comes With Music give consumers music for free but with DRM restrictions. DRM will become the key tool for differentiating premium from subsidized. The more you pay, the less DRM you have.

So it’s a case of DRM is dead, long live DRM.

But why did we have to wait so long for this announcement? European digital music execs told Forrester in late 2006 that they were ready for dropping DRM and, in April EMI went DRM free on iTunes and elsewhere. Most readers will have noticed that much of Apple’s competition has been acquiring increasingly comprehensive MP3 catalogue from the majors whilst Apple has not. Some of the majors trying to ‘level the playing field’ is undoubtedly a factor here, but it’s evident that Apple remains the biggest game in town with or without DRM-free. So all this strategy achieved was penalizing the majority of digital music buyers and the key force in one of the few dynamic parts of the industry the labels have left.

DRM-free should be a non-story by now. It’s not even much of an issue for the majority of digital music consumers. Principally because they don’t come up against it. Apple has dominant market share in devices and downloads. So the majority of digital music buyers don’t have DRM interoperability issues. And anyone who wants to burn more than 5 CDs knows how to. But at some time Apple may lose market share, perhaps to music enabled phones. When it does, consumers will start encountering interoperability issues. So it’s actually in the interests of the labels to weaken Apple’s lock in sooner rather than later in order to aid any such transition.

Finally, from an Apple perspective, dropping DRM starts a process of bringing iTMS up to date. Whilst the iPod and iPhone have undergone key transformation, the iTMS has essentially remained unchanged save for Genius. Whilst MP3, social music and mobile music happened around it iTMS clung stubbornly to it’s 2003 blueprint. Nokia’s Comes With Music is arguably the first major challenger to the iPod / iTunes dominance, because it a) is an integrated device / service proposition buy b) because it tries to do something radically different i.e. unlimited permanent downloads. Apple know they need to respond. DRM-free across all catalogue is a first step towards putting clear blue water between them, but they need to do a lot more yet. Ideally the next steps will be in the social-music direction, building upon the start made with Genius.

Music Mistakes, Myths and Misconceptions. Part 3: Subsidized

One again, continuing my bid to provide more fuel for the ‘music should be free’ fire this is the third in my short series of ‘Music Myths, Misconceptions and Mistakes’ posts, tackling one big ‘free’ issue at a time.  Today’s topic is Subsidized* (the previous two posts can be found here: Part 1: File Sharing  Part 2: Ad Supported). 

 

*i.e. a service where all or most of the cost to the consumer is paid for by the content provider e.g. Nokia’s Comes With Music (CWM),  Sony Ericsson’s Play Now plus (PNp) and TDC’s Play

 

Subsidized: 10 Mistakes, Myths and Misconceptions

 

1.      Misconception: subsidized offerings will not further erode consumer perceptions of music as a paid commodity. Whatever the restrictions on marketing (see #2) consumers are smart enough to perceive CWM as being free music: they pay nothing for the music and the device costs the same as without the music.

2.      Mistake: not calling CWM ‘Free’ or ‘Unlimited’.  ASA concerns for the latter, and label imperatives for the former, mean that CWM cannot be marketed to its strengths.  The effect described in #1 will happen regardless of whether the messaging is overt.  Weakening the message will only weaken consumer adoption.

3.      Myth: Subsidized offerings are a necessary but ultimately short-term tool for driving digital music adoption . A whole digital generation has grown up with no concept of paying for music online.  Those habits are engrained.  Free, subsidized services, and ad supported, will become permanent features of the digital music landscape.

4.      Mistake: Managing consumer life cycles. Make no mistake, lots of mistakes will be made (!) as the industry learns how to manage these services.  One of the biggest challenges is correctly segmenting users into those who will never pay, and those who can be migrated up the food chain.

5.      Mistake: Positioning. Services like CWM and PNp can’t be allowed to be too successful – they need to be focused on core target consumers (e.g. young file sharers) and not be widely adopted by strong music buyers, else their spend will be cannibalized.

6.      Myth:  CWM and PNp will revolutionize the digital music market in the next 5 years. These services are vastly important (arguably the biggest thing to happen to the music industry in years) but their core impact will be longer term.  Near term growth will be slowed by geographic roll-out, consumer awareness / education, handset replacement cycles, value-chain tensions.

7.      Misconception: Subsidized offerings will not cannibalize premium digital spending.  As long as targeting is kept tight, negative impact on spending on operator OTA services and online stores should be minimal, but it will decrease a little, though overall revenues will increase due to licensing income. 

8.      Misconception: Consumers will not ‘max-out’ these services. TDC’s Play service has had phenomenally high usage rates (see my post here for details).  When people get unlimited access to free music, they use it!

9.      Mistake: Not having licensed to fully subsidized offerings sooner.  CWM etc. are the best tools the music industry has to fight file sharing with.  They should have licensed to them sooner.

10.  Mistake: If licensing terms don’t enable Nokia etc.to make money.  If fully subsidized service business models are not financially viable (which doesn’t necessarily mean profitable BTW) their current proponents will eventually move onto something else, leaving what will be a gaping hole in digital music provision, which will quickly be filled by illegal free alternatives again.

Why MySpace Should Think Long and Hard Before Challenging the iPod

When questioned at a conference recently, MySpace Chief Executive Chris DeWolfe suggested the social network would consider launching an MP3 player some time in the future, thus going head on against Apple.  It might sound like a logical next-step but it’s not.

 

The reason MySpace has become so important to the music value chain (both for digital and broader discovery/marketing) is because it has a distinct place.  MySpace, like imeem, Last.FM, Pandora etc. works well because it is an explicitly online, consumption and discovery based experience.  The launch of the new streaming content pushes it even further in that direction.  MySpace doesn’t suffer from the endemic DRM constraints and controversies that mire download services.  And because it is free it doesn’t have to develop a value positioning either.  In its free, online guise, MySpace sits as an entirely complementary asset alongside the iTunes / iPod combination.  

 

Sure Apple might be (ever so slowly) starting to steal some of social music’s clothes (cf Genius) but its focus remains devices and downloads.  As soon as MySpace starts trying to fight Apple on Apple’s home turf, they’ll find themselves having to reinvent and reinforce their value proposition from the foundations up.  Consumers tolerate the various quibbles and glitches that are an accepted companion to MySpace as a free, online destination.  But those standards aren’t good enough for a paid offering. 

 

When MySpace finally launches its own download store it will need to refine its music DNA, a need which will become more fundamental if an associated device strategy is pursued.   But I fear MySpace will shy away from the requisite comprehensive rethink even for the download store and simply launch it and hope/expect it to succeed.  If they do so, and launch a device in a similar fashion, then MySpace will sow the seeds for long-term decline.

 

For now MySpace would be well advised to read up on how well Napster’s branded MP3 player strategy went….remember that?  Exactly.