Thursday, July 06, 2006

Can You Give it Away?

Today's Wall Street Journal (online subscription required) has an article in the Marketplace section by Nick Timiraos entitled "Free, Legal and Ignored." The article focuses on the new Napster in the university environment and the effort of universities to provide free access to music via Napster and other authorized services. Universities' interest in providing such services is not altruistic or pampering: they want to avoid lawsuits and preserve bandwith: at Vanderbilt University, a university official is quoting as saying the school saved $75,000 a year in network costs by providing the new Napster.

Still, according to the article, the response of students has been underwhelming, with some colleges dropping the service. The reasons for students' lack of interest vary; some programs do not permit retention of downloads after graduation: one student is quoted as saying "After I read that, I decided I didn't even want to try [the service]." Another student is quoted as saying "People still want to have a music collection. Music listeners like owning their music, not renting," a quaint sentiment considering how ownership usually comes about in such situations.

And then there is the 19% penetration of Macs and the 42% penetration of iPods. The chief information at Case Western Reserve University is quoted as saying "We were not in a position to offer an alternative to iTunes. The alternatives looked like they had more sizzle than steak." So maybe people will buy, after all, if the product is right. Indeed, today's Hollywood Reporter (p.6), reports "Looking at the entire sales picture - comprising physical albums, digital albums and digital tracks - overall sales to date this year have actually gained about one-tenth of a percentage point over the first six months of '05." Physical albums are reported to have dropped 12 million units, digital albums increased 8.2 million units, and digital tracks gained a whopping 122 million units, perhaps indicating the wave of the future.

Given the use of statistics in the Napster litigation on CD buying patterns in university areas, it might be interesting to conduct studies of universities which offered such services but then stopped.

7 comments:

Crosbie Fitch said...

There are two senses of 'own':

1)Possess legal title to

2)Enjoy unlimited control over

When people say they prefer to own music, it's probably primarily '2' that they go for. '1' is just a warm feeling - which students are happy to postpone until they can afford it.

Even today, DVDs are beginning to infringe the idea of '2', i.e. you may have legal title to the copies, but you don't have unlimited control over their performance.

Hah. What am I saying? You don't even have legal title to the copies, but merely a license to their performance.

Anonymous said...

crosbie--
No, that last point is untrue AFAIK. I've really never heard anyone who actually publishes on DVD even make that argument, at least with regard to ordinary copies sold to customers through the regular retail channels, etc.

William Patry said...

I have assumed students meant it is "their" to keep forever and do whatever they want with it.

Tom said...

I just found out about a service called emusic.com, which specializes in indy music, blues and jazz. You can download the actual Mp3.

It sounds like universities can make better use of this service than they could of the new Napster.

William Patry said...

Tom:
I like you taste in music.

Anonymous said...

check out MP3Lizard.com it's 'run' by the same folks at Afterdawn.com

Marc Freedman said...

William,

Look at the week to week trend compared to last year on music industry sales to see where it's heading. The wave of the future is not pretty. See "The Sky is Falling: Is the Record Industry Ready to Face the Music?" at http://tinyurl.com/kkdyv.

Few people are surprised at disappointing music subscription sales on campus. Unfortunately, that also does not lead to a pretty future.

As I wrote at http://tinyurl.com/gwy5v , "colleges are an ideal venue for music services with benefits for everyone. Administrators avoid recording industry lawsuits. IT budgets save on huge P2P bandwidth charges. Students are easily and inexpensively marketed to through the college. Music fees are conveniently bundled in student services. Students get low pricing through volume discounts.

If RIAA-authorized music services with DRM can't succeed in a friendly environment place like schools, they have little chance with the general public."

Marc Freedman
P2P Insider's Weblog http://www.p2p-weblog.com