MySpace Music

Why MySpace Music Is Likely to Fail

Here's a post by Om Malik on the coming-soon MySpace streaming music with upsell to Amazon MP3 downloads experiment. Om thinks it will be a failure. I hope he's wrong, but the key lines from his post are:

The record labels are still not facing the proverbial music and understanding that their business model is completely broken... They need to learn that they don't need to start a company, but instead encourage a thousand others

The music labels must get out of the way of distribution - both in terms of price and rights.

My usability opinion is that any web-based streaming service is bound to fail as the music stops playing when the web page it's playing on unloads. One way around that is to pop out a player that can be minimized to the task bar, but that defeats any display advertising. Online music will only succeed when it becomes custom radio, complete with local, regional, and national audio advertising and the occasional upsell to a favorite "now playing" song or album download.

Napster and Amazon

Here are two Fortune stories on CNN about digital music that show what's wrong with the music labels' expectations, and the only way to survive under the labels' regime.

The first is about Napster's problems as a digital music pure-play trying to survive on the razor-thin margins it makes on music. Napster has never been profitable.

The second is about Amazon's MP3 store and its (and Apple's) successful big box store strategy of using music as a loss leader to get customers through the door, hopefully encouraging shoppers to attach other, higher margin, items to their purchases.

Apple doesn't care that they're not making money on music purchases. They're making tons of money on their iPods, and some more on iPod users who are switching from Microsoft to Apple PCs. Yet, the labels continue to allow Apple to define the market prices for music downloads.

The major music labels insist their content has intrinsic value. Unfortunately, the digital market disagrees - and the customer is always right.