Free Music vs. Subscription

Yahoo just turned over its "Music Unlimited" operation to the rental music service Rhapsody.

True, Yahoo is in short pants these days. True, Microsoft knows this which is why they are making an unfriendly move to buy Yahoo.

Rhapsody isn't lighting the world on fire, either. Rhapsody charges $12.99 per month for millions of songs. It promises "Play all the music you want for one low monthly price". Maybe it would do better if Rhapsody were more portable. Maybe not.

There's Slacker's WiFi Net radio player which is mobile. It has a four inch screen that pushes the Internet radio stream to the player because it is able to cache stations on flash memory -- works when WiFi doesn't. It's built to fail, however. The service is free but you have to pay -- here we go again -- $10 a month to get unlimited skipping, no ads and option to save songs.

There is persistent thinking that free trumps paid -- and that subscription services delivering millions of tunes will be a clear winner with the next generation. But to date, music rental services have not been all that popular. Stealing music is still the number one means of acquiring songs and that when music is purchased it is bought through the intuitive interface at the iTunes store.

In fact, Apple now controls the destiny of music because its products dominate the infrastructure. There are iPods everywhere. Apple has defined cool. Apple has used great precision in understanding how Gen Y thinks and what it wants.

There are also great lessons here for the radio industry.

Radio is free content. But it is content that the next generation only casually uses. I did a survey at USC today (with the usual disclaimers that these young people do not represent all young people) and few looked to radio as a music trendsetter.

One person added that radio was an influence -- a bad influence -- when it came to music.

Radio people get angry and contentious when they are challenged by the thought that their role may have to change if they want to resume being a music trendsetter.

And they will certainly have to accept that on the terrestrial signal, they know just what it takes to entertain Gen X and baby boomers (even though their owners may not give them the resources).

But when it comes to being a relevant part of the next generation's musical life, radio content providers must look to the Internet and personal mobile devices.

The next generation's passion is personal mobile MP3 devices and, again, Apple controls this.

Young people tell me that it isn't the iPod itself that has killed the record labels -- it is the ease of use of iTunes and the connectivity. That combination is the winner.

When I suggested that without the iPod record labels and radio stations would be in a better position today, I was quickly corrected -- "Something else would have come along".

Right now (in spite of their declining stock price) Apple knows the next generation better than anyone else. They have proven it. It is likely they will for the time being at least continue to serve as facilitator of music and even radio's future.

The road to the next big thing goes through Cupertino, CA -- the home of Apple.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. IMPORTANT: First you must check your mail or spam filter to verify your new subscription before service can begin.
Thanks for forwarding my pieces to your friends and linking to your websites and boards.