BERLIN, GERMANY — No, the title of this blog doesn’t refer to a new Windows Media service. Rather, it examines the possibility of the music industry adopting a digital version of the “windows” used by the motion picture industry to target consumers at the right price points.

This notion, that popped up in various forms throughout panel discussions here at the Popkomm Music Conference today, was most articulately laid out by Thorsten Schliesche with Napster in Germany. After other panelists discussed how various digital music business models had different appeals, he said versioning over, say, a 12-month period could provide consumers with what they want at different prices.

An initial launch of an album could be a deluxe offering with extra goodies — “a pair of the artist’s underwear, for example,” the wry German said — followed by an a la carte offering such as iTunes, then a subscription service like Napster, followed by a flat-rate offering such as Nokia is providing in Europe, then an eMusic-type subscription service, then a “demand-based” model where pricing is linked to demand, ending with licensing to streaming services.

There was some push-back on his timetable, with some concern that rather than wait for later windows, fans might turn to piracy. But the motion picture industry was cited as an example of a creative field where piracy is most certainly damaging but windows have survived, even if they have grown shorter.

Fans of “free music” love to cite the experiment Radiohead did giving away their latest album “In Rainbows.” Technically they launched with a “pay what you can” model, but few paid, and as Big Champagne’s Eric Garland and MCPS-PRS Economist Will Page found in a well-known study, 400,000 people downloaded the album off of torrent services for free the first day it debuted, not even bothering to go to the Radiohead web site (and thus costing the band the valuable email addresses that were the only compensation they received for many downloads). When Garland and Page presented anew their data here, TAG Strategic guru Ted Cohen noted that Radiohead made moot all three arguments people make against commercial digital music offerings — lack of interoperability, high cost and “artists screwed” by a middleman — but 60% still paid nothing for the album.

The point of bringing up Radiohead, though, is that in fact Radiohead used a windowing model with their album. The focus of the hyperactive media was on the “giveaway” feature, but what the band actually did was first offer a “pay what you want” approach starting on October 10th of last year, which then shifted to a “premium” offering at a high price point in December, to a conventional album sale model as of January 1st of this year. Despite all of the torrent downloads of “In Rainbows,” it appears this windowed approach worked for the band.

Note Radiohead turned Schliesche’s model around a little bit by starting with the potential for free. But many here noted that Radiohead was in a unique position because of their fanatical appeal, their powerful brand, and the identification of them with albums that needed to be enjoyed as a whole. (Garland noted that the torrent downloaders almost to a one downloaded the entire album, not just one or two tracks, which is rare today as I will blog next).

The Orchard founder Scott Cohen noted it is “hard to give away music,” which seems counter-intuitive, but he pointed out there are “100 millions [free] songs on peer-to-peer.” Cohen, by the way, is a Napster To Go user and loves it. Other panelists said the same thing, making Schliesche smile. I too love Napster To Go. But all of us are over 30; it’s not clear younger music fans understand the appeal of subscription music, as Napster’s financial woes suggest.

Oh, one other note on free music. There is a canard among some who wish for music to become merely a giveaway product or advertisement, as one questioner here asked. (The panelists here are great, but what’s up with some of the audience members?) Asked about a study that suggested piracy drives music sales, Garland dismissed that.

Garland earlier had demonstrated how torrent downloads were high for Radiohead but so were sales, and noted that in just about every case there was a direct relationship between rates of unauthorized downloads and sales: “Popular is popular.” As to this study, he said “they confused correlation and causation.” There data was sound, but in suggesting one drove the other, he said “they went on a bridge too far.” This is an argument I’ve made in the past, but it’s much better coming from someone who is probably more immersed in infringing download statistics than anyone around.

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This entry was posted on Thursday, October 9th, 2008 at 12:29 pm by Patrick Ross and is filed under events, internet, interoperability, licensing, market forces, piracy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.