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Which Business Model Will Dominate Digital Music Sales?

Tuesday, August 29th, 2006 at 4:30 PM - by

"The questions about business models in the digital age have not yet been answered," Jill Rosengard, managing director at research firm Frank N Magid Associates, told Financial Times on Tuesday, in response to questions about Universal's support for the ad-based music venture SpiralFrog.

Ms. Rosengard added: "Of the three possible business models - pay-per-play, subscriptions or advertising-supported - so far pay-per-play is the only one that has really worked for music. Subscription models on the internet work but only for very specific and very valuable content."

Despite iTunes' dominance of the digital music sales business, noted reporter Aline van Duyn, "it is estimated by music industry bodies that for every legally downloaded tune, people are still illegally copying 40 others." Forrester Research analyst Ted Schadler said: "It is possible that different models will work for different people. Downloads might be best for younger people who define themselves by their music. Subscriptions might work best for older people who love music but are more comfortable not owning it."

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Tiger said:

member since 17 Jun 2003 with 1018 posts, unranked, send him a message or view his profile

Tue Aug 29, 2006 5:36 pm

Before you answer the headline question, see the story about Google's CEO joining Apple's BOD.

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Mikuro said:

member since 15 Jun 2002 with 457 posts, unranked, send him a message or view his profile

Tue Aug 29, 2006 5:43 pm

What service out there uses a "pay-per-play" model? The impliciation seems to be that that's what Apple does, but that's not true. With iTunes, you pay once, and you can play it forever.

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gslusher said:

member since 13 Nov 2002 with 2088 posts, unranked, send him a message or view his profile

Tue Aug 29, 2006 5:58 pm

iTMS is not "pay-per-play," but "purchase." "Pay-per-play" would be a model where we paid everytime we played a song. There are a lot more than three business models. One must include delivery via physical media, for example.

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nealg said:

member since 22 Mar 2006 with 123 posts, unranked, send him a message or view his profile

Tue Aug 29, 2006 7:20 pm

I think there is room in the marketplace for mutliple models. The big question is what the size of the market will be for each model and how many companies will there be room for in each model to deliver the content.

Neal

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Rainy Day said:

member since 07 Jun 2005 with 607 posts, unranked, send him a message or view his profile

Wed Aug 30, 2006 10:37 pm

Dude, it has already been decided, and it’s none of the options on your list!

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