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Monday, October 20, 2008

DANISH SUBSCRIPTION BASED MUSIC MODEL GETS MUCH ATTENTION

Subscription-based music models are mostly niche plays, thanks to usage limitations and a user preference for ownership. Weak consumer demand forced once-ambitious projects like Yahoo Music Unlimited and MTV Urge to fold, and eventually meld into Rhapsody.

The Rhapsody service is now a joint venture between RealNetworks and MTV Networks, though subscribers remain under two million. At the end of the recent, second quarter, RealNetworks pointed to a broader music subscriber tally of 1.875 million, a figure that also includes premium radio subscribers.

Elsewhere, Napster offloaded itself to Best Buy in a fire-sale announced last month. The $121 million buyout was considered a giveaway, especially given a positive Napster cash balance of $67 million. But at the time of the deal, Napster held 700,000 subscribers, an eroding total.

Executives from both camps remain firm believers in the benefits of subscription. But consumers are following another gospel, specifically those surrounding discrete downloads, free or paid. They are also heavily dialed into MP3s and their iPods, a subscription-unfriendly device.

That has been the story so far, though newer, more enclosed subscription variations are entering. That includes Comes With Music, an ambitious mobile-focused initiative that prepackages unlimited content into higher-priced, compatible phones. It also includes Play from TDC in Denmark, an ISP-level service that offers on-demand access to an unlimited catalog.

Both revolve around DRM-protected content, traditionally a downer for music fans. In the case of TDC, that means tethered access to songs across PC and mobile environments, as long as the top-level subscription is maintained. After that, the collection goes poof, and iPod compatibility is not part of the subscription equation. Still, Play does not require a premium above existing broadband access charges, a critical component of the plan.

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