October 04, 2004
Price model crash for online and mobile music

Funny story in Norwegian net-newspaper digi.no: music store Mobster.no is starting sales of Microsoft WMA digital music files today. Rights-managed files which are priced at US$ 4.30 per tune (as opposed to Apple's iTunes' $0.99. In an interview with digi marketing director of mobster, Elisabeth Marie McDonald, explains the price: (my translation)

- We're comparing what truetones, 30 seconds of music used as ringtones, cost. When these cost US$ 4.45 (NOK 30), we don't think US$ 4.30 (NOK 29) for the entire song is very expensive.
Ding dong, here is a wake-up call from the digerati: fooling teens into paying for ridiculously overpriced mobile content does not necessarily mean you can pull that off for digital music. The profit margins from the mobile operator world just does not translate to online content. The competition from "free" is just too tough!

In Norway, you can legally rip music from your own CDs for free. One CD with maybe 10 tracks would cost US$ 43 from mobster. iTunes would sell this for competitive 10 bucks, the local Platecompaniet often would sell you the physical disc for less...

For a "FAQ" the Mobster FAQ has a large hole: there's no mention of the by far most selling digital music player circulating: the iPod. In fact, the FAQ states:

Which formats of music can I buy?

The preferred format [though no alternative is presented. ed.] is Windows Media Audio file (WMA). Windows is the most used format and standard WMA is free and easy to download. WMA can be played on nearly all portable players. It is also a safe and legal way to get music over the Internet.

Hm. iPod? No. Sony NetMD? No. "nearly all portable players"? Don't think so...

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To me it seems like Mobster will have one clear advantage with its inferior system when they launch: They will be alone in supplying songs for sale to the Norwegian market.

Obviously that advantage will crumble once iTunes, Real, Microsoft and others come around to offering their selection on the european market.

I would love for someone to explain why it was so hard to launch iTunes and other simular services world wide when they launched it.

That said. I still think iTunes and the rest are overprizing the songs. Remember, you get to "borrow" the songs with limited use and transferes to other media. AND the cost for distribution is miniscual to what it is in the material world. That should have had an effect on the prizes. And that is the reason I will be holding off buying any music from iTunes or the others for a good while longer. When they show me prices that are fair compared to what I am actually buying, and I'm a customer.

Posted by: Jarle on October 4, 2004 05:12 PM

MusikkOnline [1] has been selling Norwegian music (in WMA format) for a while. But I agree - as soon as iTunes and the others hit the European / Norwegian market, the prices of Mobster will need to come down. Come to think of it, all the prices should go down quite a bit to compete...

[1] http://www.musikkonline.no/
see also http://www.elcash.com/bygones/000369.php

Posted by: Anders on October 4, 2004 06:31 PM

Just checked out Musikkonline.no, and I have to say that they have a limited selection and sky high prices. Mind you, not sky high in the Mobster league, but still..

I mean, to buy the WMA DRM files (I presume) of the Tungtvann album (north norwegian hip-hop band, for those not in the know) I would have to pay NOK 133 (US $19) to get all the songs on the album. I can pick that album up on my way to work from one of several music stores for less than that. And then I will actually have a physical CD, without any DRM/copyprotection crap, and with a nicely printed folder, lyrics etc.

Why does Musikkonline think that I would be willing to pay more for an inferior product? They must be crazy...

Posted by: Jarle on October 5, 2004 12:43 AM

There is also The24 offering DRM-infected WMA-files for lease at a price of NOK 10/track ($0.99).

My problem with WMA, or AAC for that matter, is that I can't play them either on my mobile phone, or in my DVD player.

I hope that one day I will actually be able to download music legally in the format preferred by most hardware vendors: MP3.

Posted by: Arve on October 9, 2004 10:59 AM

Oh, you don't allow HTML in comments? Anyway, The24 lives at http://www.the24.no/

Posted by: Arve on October 9, 2004 11:01 AM
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