Neuf Cegetel offers Music Flat Rate with UMG tracks - the music flat rate is coming

Here is the feature from Marketwatch.com, with some of my comments inserted.

French broadband provider Neuf Cegetel to offer unlimited music downloads

                                      

By Jethro Mullen  Last Update: 8:31 AM ET Aug 20, 2007

           

"PARIS (MarketWatch) -- Neuf Cegetel  France's second largest broadband provider, said Monday it will offer subscribers a service allowing unlimited downloads from the music catalog of Universal Music, the world's largest record company. The move gives Neuf Cegetel a new edge in the hunt for customers in the French high-speed Internet market while offering Universal a fresh testing ground for ways to generate revenues from digital music."

My comment: this is not the first offering of this kind but certainly one of many new ones to come. It just makes tons of sense. However, I think the solution is not to do one-off's with a single label and a single ISP, like this, but to offer a LICENSE from ALL labels to ALL ISPs. After all, who just wants to listen to UMG's tracks and nothing else? Get out of your ivory towers and GIVE THE ISPS THE LICENSES THEY NEED.

"Starting this week, customers signed up for Neuf Cegetel's EUR29.90 per-month triple-play offer, which includes high-speed Internet, fixed-line telephony, and TV, will be able to download as many titles as they want from one of nine musical genres, such as pop or jazz, in Universal's digital catalog at no extra charge.

           

For an additional EUR4.99 monthly fee, subscribers will also have access to unlimited downloads from all nine genres, which comprise 150,000 songs and 3,000 video clips."

My comment: again, good thinking but not quite enough yet. A complete, no-friction bundle is what is needed. In media, Friction is now FICTION.

"It's clever," said John Davies, an analyst at Dresdner Kleinwort, "it gives you part of the offer and if you're a hardcore fan, you'll pay for full access... The new offer is another example of attempts by Universal, home to artists such as U2 and Eminem, to wring revenues from digital music in the face of widespread piracy.  Universal said earlier this month it would test out the online sale of music without digital-rights management, or DRM, technology, for a limited time through artists' Web sites and several online music retailers. DRM technology, which is designed to prevent or limit the copying of music tracks, can also irritate consumers by restricting the type of device or number of computers they can use to listen to the songs."

My comment: now that is a great way of putting it: 'can also irritate consumers'. Made my day!

                                   

"The music files available through Neuf Cegetel's offer will have DRM protection. Customers will have to maintain their subscription to Neuf Cegetel in order to keep listening to the tracks. The music tracks will play on personal computers as well as some MP3 players and mobile phones."

My comment: yes yes yes... they love those walled gardens. To get the goodies you gotta stay INSIDE and live by OUR RULES. Well - it well take them a while to realize that everyone hates this idea, and they'll drop it to get more traction. Message from Gerd: you can have your cake AND eat it. You can't have full control AND new revenues. End of debate.

It's the EndofControl as we knew it. Watch for my new book on this subject. ETA... virtually soonest.

Comments

[Jon Smirl]

It's like Prohibition. Give up and legalize it but tax it via a flat use fee. Why does the ISP even need to be involved? Can't the RIAA put up a web site that takes credit cards and cut out the middle man. Then continue with their legal program and sue people who are trading and not paying the fee. Now these people have no excuse, with a fee system in place there is a legal alternative as opposed to the current mess.

The big question is how to distribute the fees collected. I think they should go out based on live performance revenues. That would give bands a giant incentive to tour. And it's a feedback loop, free music increases your popularity which makes more people show up at your live concerts. If no one will buy your tickets, the band should get a message out of that.

Another trouble with the flat use fee is where to set it. I don't think anything over $10/mth is going to fly. But what is stop the RIAA from getting everyone onto the flat fee and then jacking it up to $50/mth. In my opinion once this fee is set it should never change unless the pool of money is not large enough to entice groups to do live performances. But live performances still need tickets so the revenue can be adjusted without changing the fee.

Can't the RIAA multiply? The profits from the flat fee will exceed what the music industry earns today since their costs will be so much lower. Don't focus on revenues, focus on the profits. Of course the bands may figure out that they don't really need the RIAA in this new model.

[Gerd Leonhard]

You have some good points here, Jon! Thanks for the comment

[Dave Allen]

The problem I have with any of the isp's jumping in to provide access to music is very simple - we don't need access to more music. We have so much access as it is. We certainly don't need a subscription service either. Kids today don't value music in the way other generations did. They don't collect music as we once did, they download it or rip it and when they're bored with it they dispose of it. The old-fashioned idea of making money from music transactions is the elephant in the room. The comment below is from my blog where there has been a discussion of the future of music.

"we’ve rejected corporate cd sales. done. kaput. we’ll reject a subscription model with similar passion. now, its about exposing ourselves to a wider range of music than was ever possible before the internet. we email each other. we im each other. if something new is buzzing, a mp3 will find its way into our library. a subscription model seems too simple. i like the adventure of finding out about new music. that doesn’t mean stealing. there are bound to be new advances to allow musicians to broadcast their setlist at shows for purchase and download on our mobile devices. (cough cough. wifi music store….cough…iph….cough)

i’m not ready to blindly subscribe to everything. we have too much already. i want ways to filter down and get higher quality music. not simply more music….."

Dave Allen Pampelmoose

[Gerd Leonhard]

Dave, thanks for your comment. I have thought down this road quite a bit myself, and I think there may be good case for 'free music', period, as well. However, I think that the ISPs will have so many really good reasons to make music a great EXPERIENCE (which includes sharing tools, community etc) if and when it is finally blanket-licensed that it will benefit everyone. And do keep in mind that I don't think anyone will actually pay the flat-rate themselves (i.e. as a user) - rather, there will be a myriad of ways that the $1 / week / user can be generated: ads (and with that I mean ads2.0), sponsors, bundles and last not least the ISPs themselves using it as value-add (i.e. marketing cost). Therefore I don't think that the users will reject the flat rate, and neither will the artists - there is nothing but benefits in here for them. Zero threshold for the user.

[Dave Allen]

Gerd,

Well if that all comes to pass it sounds like a win/win to me...

[Dave Allen]

And the people who read the New York Times have given the thumbs down to Rick Rubin's proposals. Read their letters here - http://www.pampelmoose.com/mspeaks/?p=980

[Denis Eggert]

Somewhat off topic but since you guys are in France at the moment, here are some new numbers from Germany:
http://www.bitkom.org/de/presse/8477_47992.aspx

(market +25% in 2007 to approx. 60 mio. €; approx. 34 mio. songs & cd's to be downloaded)

In my opinion it may be aggrevating what Neuf Cegetel is doing (as DRM may be irritating). What kind of incentive is to be allowed to download a part of a catalog from one label? And then I have to pay extra € to access more? If consumers have a brief look at the market they'll notice that there are far better services available.
In the big picture though, I'm still shocked that the labels haven't opened the doors to their Ivory Towers ;)

[Gerd Leonhard]

Denis, yes indeed, the DRM will have to go, and the other labels will have to join, otherwise it's bound for the graveyard. but still: the IDEA is there.