Subscription Models Redux

Last week I posted an item here citing Glenn Peoples’ analysis from that concluded that the music business could learn a lot from a subscription-based service like Netflix.

Since those items appeared, I’ve been monitoring the industry reactions.  And frankly, what I glean from the coverage is “habits change… but not easily or readily.”  Some people are just determined to maintain the status quo, regardless of how antiquated that status has become.

Of particular interest was this convoluted analysis by Ethan Kaplan, the former Senior VP of Emerging Technology for some now bankrupt enterprise called “Warner Music Group.”  Maybe the previous affiliation offers some kind of clue re: the perspective when Kaplan starts out by saying…

Today I was driven insane by an article implying that Netflix could serve as a model for the music industry. The article was written by Glenn Peoples, an otherwise upstanding journalist who fell for an associative fallacy that seems to befall everyone when thinking about media. For some reason, when it comes to the monetization of content, a half century or more of media theory discourse seems to not matter, and people feel comfortable applying strategies applicable to one modality of media to all others. Because the modes are similar, so must be the means of monetization.

What follows is Kaplan’s own McLuhanesque (i.e. hard to follow) discourse on media theory that takes issue with Glenn Peoples’ conclusion that “Netflix consumers have proven they will rent content – even re-run content – and stream it from the cloud.”  Kaplan counters with…

With Netflix customers have not proven they will rent content. They have proven they will rent visual content. Visual content is a subset of the macro concept of content, and consumer behaviors in relation to such has no intrinsic corollary to aural, printed or other forms of content such as games. To put it another way, in the hierarchy of content, what applies to a sub-type does not necessarily apply to its siblings. This article uses this fallacy as a way to call for emulation of Netflix by music services.

Actually, as I re-read both Peoples’ and Kaplan’s pieces, it becomes increasing clear to me that Kaplan is the one who misses the point, and now he’s driving me crazy with his verbose, theoretical assertions re: why subscription models won’t work for music.  It sounds every bit like a discourse written by somebody from a record label – precisely the people who expect us to keep buying and storing individual “units” of content when it is all already stored for us elsewhere (and the access improves daily).

Kaplan takes Peoples to task with statements like “Value is inversely proportional to the affordance of ubiquity provided by a media.”  What are we to make of a single sentence that manages uses the words “affordance” and “ubiquity”?  (I’m not even sure “affordance” is a real English word – my spell checker keeps putting little red dots under it.)

Basically, near as I can tell, Kaplan is trying to earn his McLuhan bona fides by explaining to us that visual media are different from audio media.  Well, duh.  But that obvious difference does not force the conclusion that a streaming/subscription model has no application for music.

Kaplan wants us to believe that because the way we use visual content (typically, seated and gazing at a single spot in space) differs from the way we use aural content (countless ways: while driving, while reading, while doing the laundry, while screwing…) that the way we acquire one has no viability for the other.  He writes…

…given the radically disparate notions of spectatorship between audio and visual content, to think that Netflix serves as a model for what an audio “Netflix like” service should be is absurd.

As Kaplan says, “wrong.”

Peoples is not writing about how we use the content.  He’s writing about how we get the content:

So what is Netflix doing that music subscription services could emulate? The price has to be right for the product: Netflix costs $7.99 for unlimited streaming and it’s a price point that clearly resonates. Music services that include mobile options cost $10, a price point that is clearly not attractive for current music services (add auto and living room functionality and that could change)….

But much of what makes Netflix successful has nothing to do with licensing deals: It’s a strong product that’s easy to use, with incredibly helpful recommendations and constant improvement based on customer feedback. Music services can do all these things, plus add features more unique to music such as social and sharing functions and a “lean back” radio feature that requires little effort other than hitting the “play” button.

So, yeah, sure, as long as you come from the “buy my plastic wafers” school of music distribution, you’re going to find all kinds of reasons why “access” to everything is less desirable than “ownership” of a tiny sliver of what is available.

Old habits die hard.  And maybe they don’t die at all until the alternative becomes entirely and indisputably viable.

Which brings me  to this comprehensive analysis of subscription services which Kyle Bylin posted to Hypebot back in March.  Kyle does an excellent job of explaining why streaming music subscription services — starting with Rhapsody — have yet to have a meaningful impact on the marketplace.

A couple of months ago, I wrote another piece telling the story of Eldridge Reeves Johnson, the man who made such dramatic improvements to Emil Berliner’s gramophone that the entire recording industry was born.  There is a contemporary analogy in the Berliner/Johnson story.

By the time Berliner brought his invention to Johnson, recorded sound had been around for nearly 20 years, but very few people had a phonograph in their home.  It was not until Johnson took the technical impediments out of the technology — and, more critically, devised a viable business model — that storing and playing recorded music in the home became a common practice.

A similar challenge now faces the streaming subscription model of music distribution.  The basic technology exists, but we’re still waiting for somebody to assemble the right combination of streamlined technology and irresistible marketing.  As Bylin suggests near the end of his essay, perhaps it will be Slacker, which will soon combine the passive Pandora-type experience with an interactive on-demand service like Rhapsody, MOG, Rdio or Spotify.  A combination of services like that will be very tempting – especially if it can include the sort of pricing and features that Glenn Peoples identifies from Netflix.

One of these days, the pieces will all fall in place.  And the fact that watching movies is different from listening to music is not going to prevent it from happening.

Wasn't that entertaining and informative? Why not share it around the web?


About author View all posts

Paul S