Ruminations on Bundling Music

A report I read this morning on Coolfer regarding Nokia’s “Comes With Music” initiative really caught my eye, and has got me wondering about logic behind music bundling solutions and whether they could prove to be a lucrative source of revenue for some segments of the music industry.

Examining the Concept:

The essential logic of such a service is pretty straightforward. People download music for free. So, instead of mounting some unsuccessful campaign to prevent that from happening, why not allow them to do so while at the same time wresting some money from them indirectly. By building the cost of the music into the device used to “pirate” it, then everybody will still get paid without forcing the consumer to change their behavior. Another angle of attack is to put a tariff on the conduit, aka an ISP tax, which essentially amounts to the same thing. These sound like completely viable solutions, right?

Well, not necessarily. The big, glaring problem with both of these options is that they do not discriminate between a user who downloads a couple of songs illegally a month and someone who is consuming hundreds of gigabytes in the same period. Ultimately, this is unjust. Secondly, this essentially makes piracy okay. While that last point may seem kind of moot now, it is important to remember that a practice is no less illegal just because it is pervasive. Raising a white flag will ultimately lead to a further loss of revenue for the industry and the artists that make it. Lastly, if the flood gates are opened, then there is no way of knowing just how high such a surcharge will have to be in order to cover the potential lost revenues. This could be mitigated by the implementation of data caps and a tiered pricing structure based on bandwidth, but ultimately that just stifles the potential for the expansion of ecommerce and limits options for the consumer, neither of which is positive for overall economic growth.

I should make it clear that I don’t necessarily think that these proposed solutions are completely off base, but I do think that calling either one of them a cure-all (as some seem to have done previously) for the music industry’s current woes is ludicrous.

Further Reading (And Listening):

http://www.eff.org/deeplinks/2008/03/monetizing-file-sharing-collective-licensing-good-isp-tax-bad

http://www.techcrunch.com/2008/01/10/the-music-industrys-last-stand-will-be-a-music-tax/

http://www.mediafuturist.com/2009/01/isps-and-music-compensation-not-control-comments-on-new-content-economics.html

Random Aside:

Why hasn’t any cell phone company struck a deal to bundle these guys with a handset and service plan yet?