Amid the hoopla of one online music service after another opening their virtual doors to offer hundreds of thousands of tracks to eager consumers, New York-based marketing research firm, NPD, issues a sobering report that claims illegal downloads from peer-to-peer networks are on the rise and legal music downloads from commercial services such as Apple’s iTunes Music Store have declined.
According to the firm, legal downloads fell to nearly one million users per month in May, June, and July of this year, from a peak of 1.3 million in April 2004. Reportedly, 6.4 million users obtained music from peer-to-peer sites in July 2004 versus 5.1 million users in August 2003. These numbers do not include files that are posted to newsgroups, another popular place for obtaining music illegally. They also don’t present an up-to-date picture of today’s digital music market — both Microsoft and Virgin have launched music services unaccounted for in these figures.
NPD suggests that downloads from commercial services peaked in April to coincide with promotions such as Apple and Pepsi’s 100 million song giveaway (ultimately only 5 million songs were claimed). Once these promotions ended, purchases declined.
Other than telling us that high-profile promotions drive purchases (or, at least, downloads), what other lessons can we take away from this research? The obvious conclusion is that consumers prefer to get something for nothing. It also hints that despite well-publicized raids by the RIAA, the entertainment industry’s power to prosecute has done little to dampen the enthusiasm for sharing music. And finally, we learn that simply offering a convenient way to purchase music online is attractive to some, but isn’t compelling enough to divert the majority of consumers to the Path of Musical Righteousness.
So what should those involved in commercial music distribution do? Let’s examine the possibilities:
1. Hang song swappers from the nearest light pole.
Note to RIAA: Making an example of song swappers doesn’t seem to be working. Maybe you’re just not being harsh enough.
Then again, perhaps it’s a flawed strategy. Take a look at your email client’s In Box and consider how well prosecution has deterred spammers. Face it, this kind of prosecution will stop the casual swapper, but there will come a day when someone figures out how to make giving away music commercially viable. When that day comes, free music goes offshore and you’re hosed. No number of lobbyists or dollars slipped to a convenient congressman is going to make this go away.
Given that the bad cop hasn’t been terribly effective, how about giving the good cop a try?
2. Listen to Wal-Mart
Rollingstone.com, in a case of turnabout-is-fair-play, Wal-Mart is putting the screws to the music industry and demanding that it lower the price of CDs to the point where the chain can sell discs for under $10. It’s estimated that Wal-Mart sells one out of every five audio CDs, giving it the unique power to dictate what it pays record companies for music. If it’s unhappy with the price, it simply doesn’t carry the disc — a prospect that gives the industry the jim-jams.
Wal-Mart’s right, the price of music has to come down — and not just for Wal-Mart, but for everyone. When the audio CD was first introduced at prices double that of records and audio tapes, the music industry claimed the high price was due to a lack of manufacturing facilities. Once more facilities were in place, prices would fall.
If legal music sales — both in disc- and download form — are going to increase, music must be affordable. $10 per disc seems reasonable but a downloaded album, which includes no packaging and costs nothing to ship should cost less than a physical disc. Also, this selling-the-album-by-song scheme that forces consumers to pay $16.83 for a 17-song album has to stop.
3. Offer More Than Music
Apple and a couple of other outfits have it right. If you give people a reason to stop by your shop — and that reason may be as simple as a free download, exclusive video, or celebrity playlist — they’re likely to stay and buy something.
Other inducements for purchasing the real thing might be music files that contain embedded lyrics (viewable on your music player) or offer links to exclusive material from an artist’s website. Yes, such tunes could be ripped into another form and given away for free, but they’d likely lose the add-on material that makes the purchased version more attractive.
4. Make Impulse Purchasing Easier
When you walk into a real record store, you hear music playing and find the currently playing disc displayed in an obvious place. If it’s to your taste, you might buy it.
The online stores allow you to preview tracks, but they’re not fed to you. You have to make the choice to play one song or another. Why not create a listening area where you can sample streams of music chosen by the store that you might like to purchase (you can even do this by genre so you don’t have to listen to a style of music you loath). To protect these streams from being captured, don’t play an entire song but enough of it — a couple of minutes, perhaps — to get the idea across.
And the day is coming when your cell phone will be one of the major avenues for purchasing music. As that day approaches, offer music feeds to the phone — click a genre and choose Play. If you hear something you like, hit Purchase and the song downloads to your phone (from where it can be transferred to an authorized device for burning the tune to other media).
5. Offer Higher-Quality Files
If you frequent places that offer illegal music you know that much of this material is encoded at higher bit rates than music sold by most of the commercial services. Obviously, these services have to consider convenience and so sell tunes that don’t take forever to download. However, there’s a market for those who want their purchased music to sound as close to the original recording as possible and won’t mind waiting an extra couple of minutes to download these higher-quality files. While I think music services would have a tough time getting customers to pay a premium for files encoded at a higher bit-rate, offering the option to download such files would likely gain greater customer loyalty.
I don’t have all the answers. Hell, I may not have any of them. Keener minds than mine are tackling these issues. Perhaps yours is one of them. If you’ve got a better idea, I’d love to hear it. See that Comment link? Put it to good use.