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The premise of the article below, published in the early days of the internet (2001), is that people are willing to pay far more for connectivity than for content. There is a brief but telling discussion of the music recording industry in which the author suggests that an advertising funded internet distribution system as we see being attempted now in Spotify would be more viable and efficient than the existing system of CD sales (Napster had recently become big news). Ed.: Telecommunications systems and the internet itself, otoh, are far too expensive to be funded by advertising alone.One could take issue with certain of the arguments and predictions (ain't no such thing as a perfect crystal ball) but the basic thesis expressed in the snappy title has proved out, in my opinion. For years, the recording industry has obsessed with content and underestimated the importance of connectivity, greatly to its detriment.
Edits: 09/06/14Follow Ups:
Of course I agree, and also that many people do not understand the difference or understand how this might apply to Streaming Music.
To my mind, it's quite simple. People will pay for the quality of the stream (SQ, bit rate, ad free, etc.), which I would term as ACCESS. I believe that CD quality streaming is on the way and people will pay MORE for ACCESS to a better quality stream. I certainly will (and now do).
They are far less likely to pay for CONTENT, in the form of a charge per tune streamed or a charge for streaming based on a charge per minute, hour, etc.
Link Below: Not that I 100% agree with everything this author says.
People pay for the access in order to get the content. The content is, in fact, the motivator. Nobody would pay for Netflix (or the internet connection to access it) if they weren't able to access content that they wanted.
The notion of access vs. content is really about content vs. unlimited content. Of course unlimited content is attractive/motivating, but it's a function of price. At price x there are thousands of people who are willing to pay for it. At price y there are millions. At price z there are hundreds of millions. The question is does the math add up?
What if unlimited access to music were $500/mo? Would that still be what everybody wants?
Dave
You stated that $10 for unlimited access to shitty 320Kbps MP3 (in Spotify's case, Ogg Vorbis) was too cheap to be sustainable.
I agreed and stated that in Europe some people pay more like $30-$40 for unlimited access to 16/44.1 Lossless FLAC.
Your claim is that NOBODY would pay twice to three times as much money to stream music at three times the bit depth as long as the crappy sounding cheap stuff is still on the market.
That's where we left it.
We'll have to wait and see.
"Your claim is that NOBODY would pay twice to three times as much money to stream music at three times the bit depth as long as the crappy sounding cheap stuff is still on the market."
No, I said the public at large wouldn't. Of course some audiophiles like us will pay stupid money for all kinds of things.
Dave
only the most expensive, the $10 per month plan that you claim is killing the industry, includes 'enhanced quality' 320Kbps streaming.
By you're argument above, nobody but us crazy audiophile would pay extra for that 320Kbps stream when we can have 128Kbps for free.
I think people pay the $9.99 for unlimited access, not for the sound quality.
Dave
. . . was to avoid those obnoxious hip-hop ads at twice the decibel level!
and a BETTER Classical Catalog than Spostify.
Better 'Search' as well.
QOBUZ is calling you. ;-)
Check out this link:
I promised Lossless FLAC later this year but at $30 a month not $20.
Interesting that it's $20 per month in the US and 20 Pounds in the UK. That's almost twice as much in the UK as US. Market size?
So when QOBUZ comes to the US it may be cheaper as well?
Love to move up from the 'Classical Only' category and enjoy some Rock or Jazz on occasion.
But for 15 Euros a month for all-you-can-eat Classical Music Streaming, I'm happy as it is.
Heading off to our little corner of France tomorrow and thinking of upgrading to the $20 Euro plan so I can stream R&R and Jazz/Blues. Thinking of even droping Spotify, but wife likes to use it with the SONOS which does not support QOBUZ as it's not in the US as yet.
Also, QOBUZ only supports 3 devices simultaneously( I think), and with the laptop, iPhone and iPad I'm already there. PIA to deactivate one in order to activate another. At least a PIA for me. Perhaps it's easy for others.
I don't think there's any surprise that people will pay more for connectivity than for music, of course it has far greater necessity. All it's saying about internet-based music is that the overhead is lower and so total revenue required is lower. This is true but that's not necessarily a positive either, as the perceived value of digital products is much, much lower than physical ones. Like anything, the price people are "willing to pay" is a function of motivation and availability. If it's available for a low price of course people won't be willing to pay a higher price for it. If it's something they can't get for a low price, the price they are willing to pay is a function of how motivated they are to buy it.
It's worth noting that many of Napster's strongest proponents have since changed their tune, but the damage is long done.
Dave
And yet often on Amazon you can buy the NEW CD for less than the cost of a crappy MP3 download of the same material.
Go figure.
"[T]he perceived value of digital products is much, much lower than physical ones."
Maybe so, but music isn't a physical or digital product, is it? We lawyers use the clumsy term, "intellectual property", which works for our purposes, but doesn't fully describe it either.
I brought my family to a James Taylor concert this summer, at a pretty significant cost. We left happy but with no digital or physical products, and no intellectual property. OK, maybe a couple of photos on my smart phone. ;)
Well, recorded music is a product, in whatever form.
Dave
When selling your music downloads, offer to send (for an additional price, of course) a nice glossy photo or artistic poster. You can always bundle music with a physical product, and I agree it can have added appeal.
Anything to make the digital more tangible has to be a good thing IMO. Many people do something like that with Kickstarter campaigns, interesting to consider it on a more traditional sales front.
Dave
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