Throughout this country, in conference room after conference room and boardroom after boardroom, executives of content companies strategize how to respond to the alarming trends associated with owning physical media content. This has been mainly reflected in the downturn in CD and DVD sales. More recently, games have been added to the list. Many in the media industry are frustrated by the slower than forecasted growth of electronic sell-through or download to own content. And, specifically in the music industry, many are split between two ideologies for monetizing digital content – Ownership vs. Access.
While many believe that Spotify and/or Mog are going to transform the music industry and somehow replace the revenue from the fast eroding music purchaser, I am doubtful this approach will save the industry. Furthermore, this dialogue camouflages the true problems with digital sales. In the physical world, Ownership and Access are clear cut user experiences each with their own value proposition. In the Digital Age content is easily available through illegal file sharing, and digital ownership experiences are limited and governed in a way that challenges the integrity of the intended experience. Therefore, if media executives are committed to electronic sell-through or download to own content, they must re-examine how they define digital ownership and encourage meaningful innovations.
Again, looking at the music industry, Lala introduced a novel access based business model – but failed to gain traction because of other more compelling (free) access models in the marketplace. Without question “free” access is highly desirable for consumers, but content owners and entrepreneurs have yet found a profitable monetization strategy. In December, when Apple acquired Lala, most industry insiders recognized Apple’s desire to transform iTunes from a pure download to own experience to a cloud-enabled ownership model. The complexities of music licensing however, may prevent this vision coming to fruition.
In the music industry, there are competing opinions of what is meant by “Digital Ownership”. Michael Robertson, an outspoken critic of the licensing practices of the industry, founder of MP3.com and current CEO of MP3tunes.com, has spoken frequently that consumers should have the right to stream their personal owned music from personal lockers or cloud services without the service provider being responsible paying additional royalties to labels. But labels on the other hand, contest this position and argue that cloud based streaming constitutes a different licensing right than electronic sell through and thus triggers additional royalties.
No matter which side of the argument your business interests may place you, the greater argument where I believe most would agree is that increasing the rights associated with “Digital Ownership” will make digital content more attractive to consumers, thereby making them more likely to become purchasers.
Those who believe that consumers want Access and don’t care about Ownership may be right. But then again, it may be those who believe that consumers want to own content, who are correct. Regardless, both sides would likely agree that Digital Ownership needs flexible usage models that include anywhere, anytime access – and responsible sharing or trading, otherwise, it is just not an attractive enough proposition to purchase digital content. Without innovation around Digital Ownership, the media industry may not have a choice – leaving them without an electronic sell through option to monetize digital content.
Just as technology has created unprecedented opportunities for Access models, the same holds true for commerce models that deliver on the promise of Digital Ownership. To date, there isn’t a single digital music, movie, television, book or gaming service that has delivered a Digital Ownership experience that exceeds the physical media experience. Until entrepreneurs and content owners effectively deliver on the promise of the Digital Age – none of us will fully embrace digital content ownership.
(Disclaimer: I am the CEO of huvi, a digital media service that is under development that promises to revolutionize what it means to own digital content.)