Christmas shopping with a friend in search of an MP3 player for his mother, who needed a Walkman replacement, it hit me. Maybe all the outfits lining up to sell music online can survive, prosper even. Common sense suggests that Coke, Wal-Mart, Microsoft, Apple, RealNetworks, PayPal, HP, and surely someone else in the last fifteen minutes cannot all make it, and that the hype will surely dissipate in a mass of crumpled PowerPoint gels.
But upon confronting row after row after row of bright and shiny, neat and tiny, silver, black and blue, and red and white MP3 devices, I'm not so sure about that. Despite the wide variations in price and look, the one thing they all promised was to put the consumer in control. That, if delivered, is a recipe for success.
Of course, the music companies themselves get scant credit for this revolution. They had to be dragged kicking and screaming into a new distribution model that puts the little devices at one end. Two upstarts, one known and one not so known, gave the the industry a big shove in this direction.
Shawn Fanning's Napster, of course, made it brutally clear that music could and would be disseminated with ease on the Net, and that it would be done via a de facto open standard, the MP3. The industry could either play ball or lose out entirely. It had to face the same cold calculus presented to Frank Sinatra and Dean Martin by Cesar Romero in Ocean's Eleven: "Fifty percent of something is better than 100 percent of nothing."
Charging a few coins for a song is but a short hop from swapping them for free, so no wonder Apple jumped on this little incremental improvement with iTunes and made it sexy, not to mention function as a loss-leader for scads and scads of iPods. But another more obscure innovation is also driving the MP3 train.
ImagineRadio was hatched by a small California software company way back in the pre-bubble days of the 1990s, a technological epoch ago. Yet what ImagineRadio did was give users the unheard of ability to create their own playlists and virtual radio stations. It had the capacity to learn preferences for artists and actually allowed the user to select just how heavy a rotation an artist would enjoy. And in an important step beyond mere swapping of known quantities, an ImagineRadio station could integrate a user-selected level of new music from, again, user-selected genres. In other words, the service could create new fans of new music. It could actually grow the pie.
And for that the recording industry slapped it hard, claiming that copyright protections prohibited such a user-driven jukebox. ImagineRadio was threatened with legal action and dumbed down its features in response. Viacom's MTV wing soon bought ImagineRadio and subsumed the service into its SonicNet portal (remember portals?) and ImagineRadio basically died a slow death amid legal wrangling.
But just in the last year or so the much of the functionality of ImagineRadio has been reborn in places like iTunes and RealNetwork's Rhapsody. Rhapsody especially recreates much, but not all, of the user-defined radio playlist concept, this time with an eye toward selling MP3 copies of the songs played at 79 cents a pop. The difference is that Rhapsody requires a $10 a month subscription in exchange for all the control.
This business model has lead to criticism that music lovers don't want to have to "rent" their music, but own it. Steve Jobs confidently told Rolling Stone earlier this month that subscription-based music services are destined to fail. But in the same interview Jobs also says someone has to help pick out the good music for listeners. "The world needs more smart editorial these days," Jobs says, explaining why he thinks record companies will not disappear overnight.
It seems self-evident that consumers will always be willing to pay something for help in finding music they like. The whole satellite radio biz would not exist otherwise. Whether the something consumers pay is via a subscription service charge or a $20 CD is a wash. Jobs is essentially saying that informal, free networks can supply this service for everyone, which seems a stretch.
There also remain very basic questions of pricing and divisions of labor along the music chain of command, as well the crying need for a copyright holder to be daring and do something like offer their out-of-print back catalog up for cheap downloads.
But with MP3 players confidently marching beyond dorm rooms and positioning themselves under millions of Christmas trees, the seeds of a new order may await.