March 11, 2004
Pay-Per-Download v. Subscription
Ernest points out some of the challenges of pay-per-download (PPD) stores. I generally agree that the subscription services will eventually be market leaders. But, in the near term, I doubt it’s gonna happen. The prices, summed over a year, are still substantially above average consumer spending on music (~120 v. 71). It might take some time to get portability figured out, especially considering all the interop issues in the current PPD stores. The sooner the better for the subscription services on that front. (BTW, it appears I was wrong earlier when I said that Napster 2.0 allowed premium service tethered downloads to be moved to portable players. I remember reading it in the terms and conditions when it launched, but I think the terms have been updated, and this press release makes it pretty clear that porting can’t happen.)
Meanwhile, in the long run, PPD stores might actually be able to reduce their prices. As volume goes up the credit card payments will be more manageable, and there will be a little more flexibility in pricing. Bulk pricing rates would have a similar effect. However, given that people are using the PPD stores now because they don’t have to buy in bulk, I’m not sure how successful this will be; if they want bulk, they’ll go to the subscription services, so long as the portability issues are resolved.
Finally, I’m not sure the iPods are actually going to change expectations too much in the near term. If you have enough cash to spend 500 bucks on a 40 GB iPod, you’re probably an adult, who has already accumulated large CD collections. Large enough to fill 40 GBs? Probably not. But adults also are not the primary P2P downloaders, so it’s not like buying the iPod is going to drive more people away to P2P. Of course, as Ernest pointed out to me over email, kids are getting the the iPods as gifts, so that will work against this hypothesis.
Filed by Derek Slater at 12:27 am under General news
1 Comment
