Wharton Tech Blog

In a timely follow-up to my previous post, a UK magazine Revolution reports from a survey that a vast majority of people prefer CDs to online music as a lasting music purchase. The survey reports that most people view online music sales as impulse purchase or to sample new albums before buying the actual CD. In fact, most people indicate that they will buy same number or more CDs in the future.

This survey is based on 1400 respondents and could be biased toward

people who probably fully understand the DRM-ed nature of online music, are ardent music fans and don’t believe in the compressed music as a lasting format, or are exaggerating their interest in CDs. These possible biases aside, it is clear that online music presents partially complementary product to CDs and just another distribution channel. Given the close to zero distribution costs per song from online sales, this format presents promotional opportunities for the music industry. However, it is clear that their is interest in a music format that is indicative of permanent ownership attributed to current CDs.

Long term, I see a slow death of the CDs, lasting 10 years perhaps, with a high-quality DRM format taking shape that embodies the permanence of CDs (ie ability to transfer and play on multiple family-owned devices and deactive old devices, perhaps a central registry of your allowed devices and purchasing a per-device licence in the future). CDs will continue to be around simply because of the players, and because not everyone lives in the US with third-world countries finding cheap CDs a much better medium. This could create a dual distribution system that may be open to more piracy. Given how slow the music industry has been in adopting new models and replacing old ones, and how receiptive they have been to kludgy models with a hammer-type enforcement, I see other venues for piracy opening on their own participation. Ah, the irony…

This entry was posted on Saturday, September 18th, 2004 at 4:44 pm and is filed under Consumer Tech/Digital Media. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.