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An Ad, Ad, Ad, Ad World for Yahoo Music?

Posted by: Heather Green on May 25, 2005

Om Malik has a thoughtful post on how the model at Yahoo’s new music subscription service could evolve. Debate is raging around how long Yahoo will be able to offer the ultra-cheap $7 monthly pricing, which undercuts music subscription rivals’ rate of $15. Peter Burrows wrote recently for BW about what a tough model that is.

Malik’s conclusion is Yahoo will turn to adveritising to make Yahoo’s music subscription a success.

We thought that too, but according to Dave Goldberg, vice-president and general manager of Yahoo! Music: “We’re not doing this to sell ads,” he says. Yahoo, he says, already has an ad-supported model in its Internet radio and music video offerings. “For users who want more control and greater access, subscription is the right model for them.”

So, we’ll just have to wait and see how they make the model work on subscription fees alone. Afterall, Yahoo says this is an introductory offer. We’ll just have to see how long the welcome mat will be out.

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Reader Comments

Pete Jackson

June 14, 2005 12:38 PM

The interesting thing about the internet music model, as opposed to the broadcast model, is that the customer is the listener.

In over-the-air broadcasting, the advertiser is the customer, the audience is the product, and the individual listener is a supplier. Broadcast radio is all about giving away content "free" to listeners in order to supply them to advertisers.

Satellite radio, podcasts, and streaming music subscriptions seem to be more about pleasing the listener at an individual level. That is, treating them like a customer.

I haven't seen any examples yet of a successful business model that merges the two concepts: "listener as customer" vs. "advertiser as customer." I think that most subscription service listeners join because they want to be a customer instead of an audience to advertisers.

Though I haven't thought all the way through the subtle differences in the mind of the customer, I think that's exactly where the answer lies for a successful blend of the two revenue streams. That is, until we understand the psychology of the radio listener a little better, we can't mix advertising and pay services.

After all, if HBO, Showtime, Cinemax, and other pay TV channels started running commercial advertisements, wouldn't you rethink your $10 monthly payment for the service? It's a tough problem to crack.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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