Netflix's subscription business model is an online video powerhouse, but would it work for music?
There's a sharp difference of opinion in the music sector about that right now. Billboard magazine started the debate Tuesday when veteran writer Glenn Peoples suggested that the major record labels might do well to emulate some of Netflix's practices. Ethan Kaplan, a former digital exec at Warner Music Group, later that day wrote on his blog, Blackrimglasses.com, that he's highly skeptical.
The discussion was sparked by Google and Apple's recent efforts to launch cloud music services. Both would enable users to store their music libraries on the companies' servers and then stream songs to users' Internet-connected devices. Google has talked to the labels about charging a fee for the service, according to previous reports. CNET reported on Monday that Apple has told the labels it too will charge.
These companies and the major labels are betting on subscription. They're doing this though the services that have attempted to prove the model in the past have a spotty record. Rhapsody, Yahoo Music, and the recycled Napster all failed to draw large audiences. Most players in the sector dream of having 1 million paying subscribers. Compare that with Netflix, which saw 3 million movie fans sign up for its service in the year's first three months. The company's U.S. subscribers now number 22.8 million, the same amount as Comcast. Helping to fuel that growth was Netflix's offer of $8 a month for unlimited streaming access to movies and TV shows.
"With Netflix consumers have proven they will rent content--even re-run(s)--and stream it from the cloud," Peoples wrote in Billboard. "They will pay for digital content they could get for free through illegal means. They will pay if the service allows streaming through multiple devices."
Peoples wrote that Netflix's low-cost, easy-to-use Web site, and nearly ubiquitous presence on Internet-enabled devices is a worthy blueprint for the music industry. But Kaplan said that Peoples' premise is flawed at its core. … Read more