1982 Called. It Wants Its Digital Music Distribution Model Back
Overall CD sales are plummeting after eight years of unflagging erosion. Digital music sales now account for 15 percent of recording industry’s revenues worldwide and 30 percent in the United States, according to recent data from the International Federation of the Phonographic Industry. And those numbers are climbing faster than ever. Consider: This past June, Apple (AAPL) said it has sold some five billion songs on its iTunes Store. Clearly, physical media are giving way to the Internet as a means of music distribution. What better time, then, to reinvent the music industry’s business model for physical media as SanDisk (SNDK) hopes to do with its new microSD memory card album format?
This morning the company announced slotMusic, a compact memory card-based music format that can be played on cellphones, PCs and some MP3 players. It relies on MP3s without digital rights management schemes and is backed by Universal Music Group, Sony BMG Music Entertainment, Warner Music Group and EMI Group, all of which apparently believe that more physical media is the best way to reinvent their business model in the era of digital distribution. Though as SanDisk VP Daniel Schreiber notes, they do have their reasons. “There’s a billion phones out there and a lot of them can play music and a lot of them have a microSD slot,” he explained. “We think there’s still a need for a tangible, physical product. People will appreciate walking out of the store playing music on their phones.”
Perhaps. But will they appreciate carrying that music around on a 0.6? x 0.4? medium that’s about the size of a fingernail? Seems easy to lose, doesn’t it (maybe Case Logic is planning a slotMusic binder)? And wouldn’t they rather carry around hundreds of songs, instead of the dozen or so stored on each slotMusic card? And what if the memory card in their phone is already in use, filled up with contacts, applications and other data? What then? And beyond this, haven’t iTunes and Amazon MP3 made consumers more accustomed to purchasing music à la carte? Why purchase a full album at $15, when all you really want are the only two good songs on it?