Insight Out: Rent vs Own, Robertson Returns, French Stickler

The Great Debate: Rent vs Own

Napster launched its Napster To Go service last week , and is kicking it off with a $30 million ad campaign that included an expensive Super Bowl commercial. The new service is based on Microsoft’s new digital rights management technology, Janus, which supports the subscription model that allows files to be transferred to portable players. Once the subscription lapses, the files cannot be played. In effect, the subscriber rents the music for a monthly fee.

Napster is also going the route of cellular services by combining its service with hardware specials: It’s giving away three free months of the service with the purchase of one of the compatible music players.

This development was spurred by the need of Microsoft (and everybody else not named Apple) to set itself apart from market-leading Apple. Napster says its market research shows customers are ready to try the rental model. “We’re challenging the notion of what it actually means to own something digitally,” said a Napster spokesperson in a TechWeb article. Microsoft also believes there’s a market for rented downloads. Apple, on the other hand, thinks “people want to own their music rather than rent it.”

Who’s right?

Here’s one thought: They’re both right. Some will rent, some will buy, and some will do both.

There are plenty of opinions out there. Ashlee Vance wrote an article title “Why Napster will be a fully-integrated flop” for the Register. He does some math to compare the costs involved with Napster vs. iTunes, and says that Napster will fail because it will come down to ownership. iTunes allows consumers to own outright, and that’s the difference.

Charles Arthur of Net Imperitive likes the Janus model. In an editorial, he wrote, “the idea of subscription music is good; it’s radio without the talking.” He does, though, have a beef with the pricing. Engadget had good things to say and called Napster to Go’s $180 annual tab “totally reasonable to have easy access to almost unlimited amounts of music, especially since we can take it with us.” (The Engadget guys seem like Napster’s prime target: People who aren’t confused by the technology and love music enough to rent that which they don’t need to own.)

MP3.com Founder Returns

Everybody’s talking about MP3Tunes.com, the new site by MP3.com founder Michael Robertson. His history of entrepreneurship is, by itself, enough to pique interest in the newest music store, one that will sell songs that don’t come with restricting digital rights management. “I’m not excited about a world where every piece of music has to have a fruit logo on it,” he said (quoted in this piece at the Register ).

The main question is about content. Right now, we don’t know what labels have signed up for MP3Tunes.com. An online music store is only as good as its content. Why did MP3.com fall apart? Its final version (post-Universal lawsuit) had a terminal lack of hit songs. Unknown, unsigned musicians don’t necessarily make bad music, but the broad, near-unlimited audience provided by the Internet doesn’t want undiscovered songs. That’s a niche product for a niche market. Robertson, though, doesn’t aim to attract niches. His plans are on a more grand scale. His vision is to challenge the status quo. So, MP3Tunes.com will need to offer consumers a reason to visit. You can take away all the DRM, offer fast downloads of high-quality files and charge less than your competitors, but if you don’t have the hits, it’s all for naught.

France Fines File Sharer

With a 14% drop in its music market last year, it was easy to predict how France would deal with its first file sharing case. Yes, France’s first P2P prosecution is now on the books. It was against a 28-year-old schoolteacher who uploaded 10,000 files. The fine: a cool $13,300. Consumers groups and the media are acting as the standard opposition to the industry’s legal offensive. A piece at magazine Nouvel Observateur called the lawsuits “absurd” and defiantly declared, “we are all pirates.”

You’ll Have to Pry Their CDs from their Cold Dead Hands

One of the most repeated exaggerations of 2004 was the claim that the CD is dead. Portable music players and online music stores were the hot topic of the year, and the media seemed to play along with the claims of some writers and analysts.

Is the CD already dead, or is it as good as dead? (The definition of the word dead works for either.) The answer will surprise those who believe the hype. Digital downloads are certainly the future of music consumption, but the CD still represents about 95% of the market. (Cassettes, vinyl and digital downloads represent the other 5%.)

In the world of indie record stores, the domain of underground music and those people who shun mainstream trends, the CD is still the preferred medium. San Bernardino County Sun staff writer Molly Okeon talked to some Southern California record store owners and found that the culture of small store clientele is quite happy with the CD—even the ones who are iPod owners. It’s a case of practicalities as well as aesthetics. CD owners rip songs and transfer them to their iPods, which gives them both physical and digital copies. Then there’s the attachment some consumers have to the physical product, which is too strong for many purists to overcome. “iPods and (digital music) technology cannot replace the longevity and the picture and the vintageness of a CD case cover and its artwork,” said one record store owner. “It’s not possible.”

Glenn works in the music industry in New York City. He writes about the industry and music in general at his blog, Coolfer.