August 25th, 2007
Gotta Love The French
A few weeks back, I mentioned an idea I had about all the large ISP’s charging a $5 per household media usage “fee” to all broadband subscribers. In return, the households would get full access to a content repository of mp3’s. According to a recent article at GigaOM, Cable Companies in France are doing exactly that.
“Yesterday, neuf Cegetel, a competitive broadband service provider, said it will offer about 150,000 songs and 3,000 videos from Universal Music Group (owned by Vivendi (V), another French company) for about five euros a month.
Today, not to be outdone, France Telecom’s (FTE) Orange France is looking to offer unlimited music downloads (from a much bigger catalog) for free! And here I was talking about music-becoming-a-commodity. It’s happening faster than I thought.”
Given the fact that there are 69.4 million broadband customers expected in the US by 2008, $5 a month from each would inject a healthy $347 million into the music economy on a monthly basis. That would be over $4billion a year. As far as it being a software nightmare? Nuh uh, the existing eMusic platform could power the whole enchilada. Hell, the new Rhapsody America thing could even pan out this way. Some of this could also be subsidized by advertising, which could be a simple as a contextual Google video ad to watch as the stuff downloads in a window.
The hurdles? Publishers. They still operate on a penny rate of about .09 per song for mechanical (songwriting) royalties for purchased music. This differs from ASCAP/ BMI/ SEASAC performance royalties that get paid from webcasters, radio, and jukeboxes. Harry Fox Agency and the major publishers need to establish a percentage for mechanicals before this could ever take place. Of course they don’t wanna make less money.. but face it.. if the labels have to suck it- so do they. I already can hear top executives at labels also groaning in unison with the publishers about how they aren’t going to make a dollar a song anymore. But in reality- if 50% of music is ripped/ downloaded/ stolen… how much is that music REALLY worth to begin with?
Broadband suppliers and telcos also would be a problem. I imagine they’d get some serious crap from consumer groups for charging all customers a flat fee, no matter how much they consumed. Of course the deal-making would also be a chore, as there are so many different ISP’s out there, with different agendas.
I just hope everyone comes to their senses before a real crash n’ burn.
Your replies are welcome and encouraged.
Written by Bill Wilson
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On August 27th, 2007 at 11:40 am
Frank said:
The hurdles? Small indie labels being forced to swallow pennies on the dollar while majors chomp on $4.50 for each user. The same way majors get more from iTunes now than indies do, smaller companies will get the boot and be forced to close up shop because they are so low on the payment scale they can’t pay their bills.
On August 28th, 2007 at 9:04 am
Bill W said:
This is where organizations like MERLIN and A2IM come in. By joining, indies can work together to use the collective power of about 30% of the marketplace to create a more level playing field.
The failure of indies to organize in a meaningful way paralllels that of my beloved Democratic party. We are all made up of individuals with slightly different agendas. The majors (for the most part) operate in a totalitarian manner as they are governed by one chairman with unified talking points (deals) for their catalogs.