MOG to Launch in the UK: First Take

US music subscription service MOG is set to launch in the UKby the end of the 2nd quarter off the back of a 2nd round of investment totaling $10 million.

 

As I posted earlier in the month, the music subscriptions space is going through an important period of transition.  It took much of the last decade to realize that the 9.99 premium rentals model was only ever going to appeal to a niche of music aficionados, and though global premium music subscribers total 8.25 million, we’re still no closer to mass market appeal for premium subscriptions.  And yet we have a host of new entrants including, MOG, Spotify Premium, We7 Premium, Sky Songs, Virgin Media etc etc.  

So what’s changed?  Well, both a little and a lot.

The niche audience is getting bigger.  Firstly, the appeal for premium subscriptions is still a niche addressable audience of tech savvy music aficionados, but that audience is growing. It’s still far from mass market (and never will be) but it’s a more attractively scaled base now.  A few million per major music market perhaps. For a company like MOG that’s plenty enough addressable market. Also improvements in consumer technology and connectivity make it easier to deliver a high quality on-the-go cloud based experience, a crucial asset.

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Why SellaBand's Demise is the Music Industry's Loss

Yesterday fan funded band site Sellaband was declared bankrupt by a Dutch court.  This may be ‘just another digital music start up that burnt through its investment money with no proven business model’ but its demise is disappointing.

Semi-pro sites and services are a crucial part of the digital music ecosystem and despite this setback they will grow in importance.  Services like Sellaband, MyMajorCompany, TuneCore, Sound Cloud and MySpace, each in their own way, lower the barriers in the artist-fan relationship. They enable artists to reach out directly to their audiences and develop engaged relationships that make the fans feel a part of things.  The shift from photocopied fanclub newsletters mailed in the post, to active online fan communities is little short of a quantum leap. The advent of social music tools are the music business equivalent of the transition from the stone age to the bronze age.

Of course if you follow my analogy on, there’s still a lot of distance to go before we reach the iron age and beyond. SellaBand wasn’t the first high profile victim (anyone remember Snocap?) and it won’t be the last. 

Back in December I predicted strong progress for semi-pro sites and services. And though I qualified my prediction with stating 2010 wouldn’t “be their year” I didn’t expect SellaBand’s demise either.  I remain convinced of the potential of these sorts of services and it is crucial for artists and the music industry more broadly that these social music tools prosper.  If they don’t then so much of the Internet’s potential remains untapped.

People will still pay for (access to) content

Just came off the stage at PaidContent 2010, a day-long summit here at The Times Center near Times Square, dedicated to the question of if/how/when people will pay for content. The timing is good -- as I wrote in January, The New York Times is planning to charge for content within a year or so, Hulu is considering a subscription model (not necessarily in place of but, I believe, in addition to its free service), and the eBook pricing dilemmas are causing sleepless nights.

I opened the conference with a brief assertion that fretting over whether people will pay for content is based on a mistaken assumption: that people have ever paid for content in the past. They actually haven't. Instead, people have paid for access to content. But in an analog world, access was gated by physical form factors like vinyl, newsprint, and movie theaters. As a result, the coincidence of form factor and content made us believe that people pay for content.

But people have never paid for content. Even when a daily newspaper was a necessity for the average home, the dime you paid a day (in the 70s) for a newspaper did not cover the print cost, much less the reporting. Instead, it was classified ads and auto dealers who footed most of the bill. And the hours we spent on TV and radio every day through the last half of the last century until the explosion of cable in the 90s, were all free. When cable finally asserted itself, people did not pay per show or even by channel (with the exception of premium movie channels). Instead, they paid for overall access.

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End of the Line for Spotify?

In my previous post I explained how free music services such as Spotify were making premium rental services such as Rhapsody and Napster increasingly irrelevant.  Why pay 9.99 for unlimited on demand streaming music when you can get it for free?   It seems that Warner Music’s chief executive Edgar Bronfman Jr has had enough, stating that  "Free streaming services are clearly not net positive for the industry” and adding that WMG will no longer license to such services.

Such a stance is both understandable and shortsighted. 

Services like Spotify and YouTube are crucial tools in helping the music industry transition from the 20th century distribution business of selling units, to the 21st century paradigm of monetizing consumption.  On-demand, access based services will be the foundation stone of the 21st century music business.  Added to that, the majority of consumers simply have no appetite for paying for digital music, certainly not on a subscription basis.  Free and subsidized services are quite simply part of the future.

But, and it’s a big ‘but’, these services and their associated business models still pose many as yet unanswered questions.

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Putting the Crowd in the Cloud

I have a favour to ask of you: I have the germ of an idea which I am developing for a forthcoming report and I want try it on you.  So please let me know your thoughts.

Apart from the persistent pressure of free, two of the recurring trends that look set to shape the future of digital music are:

  1. The Cloud
  2. Social

First a few thoughts on the cloud….

The cloud is of course is already with us, but largely as a collection of disparate connected music experiences (e.g. Pandora, Spotify, Comes With Music) rather than as something more all-encompassing.  I’m skeptical of the truly ubiquitous experience happening anytime soon.  Indeed, the practical limitations on ubiquitous connectivity mean that connectivity will in fact fall short of ubiquity for some time (more on that from my colleague Ian Fogg later this year).  But it is clear that over the next few years more of the dots will be joined.  And sometimes the dots will be joined by innovative workarounds, such as Spotify’s ‘offline’ streaming solution.

And a few thoughts on social…

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