OK, Music Subscription Fans -- Let's Hear Your Marketing Ideas

Posted by: Peter Burrows on December 18, 2007

I just read through the 41 comments on our recent story about the opportunities for music subscription services like Rhapsody, Napster and Yahoo. Turns out 18 of you adore this approach, and think its a matter of time before others figure out what a good value it is. But 17 of you say prefer to own your music, a la iTunes, and can’t imagine paying a monthly fee for music you’ll never listen to. And oh yes, a number in the anti-subscription group just want me to stop writing about the topic. “Aaaaaaaaaaaaaaaagh!! Enough with this subscription crap!,” commented D9. “Over and over and over, you try to state how it’s the way of the future. You can theorize about it, you can justify it, heck you can even try to dream it like this article does but the bottom line is PEOPLE ARE NOT BUYING SUBSCRIPTIONS! Simply put, people don’t want to rent music.”

Sorry, D9, I’m not giving up the ship. More after the break.

One thing that's notable about the comments is the consistent difference in the perspective of the writers. Almost all of the comments in favor of subscriptions came from people who use and love this approach. They're speaking from actual experience. But I didn't get the sense that any of the people on the con side had ever tried a subscription. Correct me if I'm wrong, but you seem to be against the notion, not the reality.

To me, it illustrates the basic challenge for music subscription service providers: marketing. They haven't come close to figuring out how to highlight the advantages of their approach. Rather, they've been creamed by Apple, which has defined the distinction as "rent versus own." Hey, I don't want to pay anyone $15 a month for music I don't listen to. But having the ability to hear what I want, when and where I want it, has advantages that go far beyond the simple question of how I pay.

So here's my challenge, subscription fans: how would you market your favorite service? If you've had success in convincing friends or family to give it a try, how did you do it? If you had a $75 million marketing budget (which is roughly what the new Rhapsody plans to spend each year), how would you spend it? So send us your ideas for tag-lines, ads and promotional campaigns. Evidently, these folks need your help.

Reader Comments

Steve

December 18, 2007 8:38 PM

One quick pre-amble, because I've thought a lot about the naysayers here as well. Another reason I'm passionate about subscriptions is because DIGITAL music, as an asset, is a rapidly depreciating one with little discerning long-term value. So why do I want to own it? Why do I want to own $1,000 of legally purchased proprietary format DRM protected iTunes tunes?

OK, $75 million for Rhapsody. A few prerequisites.

1) They need to make their Web site slicker. Perhaps this is in the cards.
--More social networking features
--Better radio stations with less esoteric song selections
--Ability to build customized stations in the Web version
--In essence, bridge the gap between Web version and fat Rhapsody client SW capabilities
--Better performance on the Web version
--Faster progress with Web/mobile device convergence.

2) They need more "cool"/buzz spending and less big ticket. Billboards and bumper stickers and online marketing--yes. Major market TV--no, except for targeted spot buys and MTV/VH1 and Rolling Stone, of course.

3) They need to create a fanatical fan base and get those folks blogging...on established music sites and on their own sites. They need to do the same with upstart artists, and pay for select celebrity endorsements as well. I said "select."

4) They need to dramatically increase the number of blogs out there such as Radish that automatically create playlists, exploiting a huge cool factor for Rhapsody.

5) They need to canvas every "Lollapa-whatever" they can afford to get to.

That said, my current favorite service is Slacker.com, which I wouldn't necessarily call a subscription music site per se. And if they don't execute quickly on their Player strategy, no amount of marketing $$ will help them.

Andy

December 19, 2007 10:07 AM

I would like to hear some comparisons between Napster and Rhapsody. Napster has made some strides in the mobile market. I think the real question is "will people use their cell phones to play music?" If not, the chances for sub services are limited b/c the iPod dominates.

Jim Harris

December 19, 2007 10:19 AM

Maybe they should move away from the phrase "subscription music." Try a variety of approaches like "Music Preview" - and advertise "for $99 a year you can try any album you want for as many times as you want - why waste you good hard cash on CDs you might not like - listen to them first."

Actually, what Rhapsody is doing with Tivo, cell phones, cable boxes, stereo components manufacturers, etc. is a good way to go.

Selling hardware that has a great user interface that communicates directly with Rhapsody without a computer might do the trick for a lot of people. Something like Sonos but cheaper.

Why not a stereo receiver with a Rhapsody interface?

I never use the music service that's bundled with my Comcast Cable Service, but if they had Rhapsody and an interface that let me easily pick songs and albums and maybe showed something cool on the screen, I would play music through my HD TV setup.

I also think they should promote the idea of pay once use anywhere. So with one payment you can listen at home or work or on the go or on your TV.

Buying music is like getting married, Rhapsody is like being single and free.

Jim

wyly

December 19, 2007 11:14 AM

I've been a happy Napster subscriber for over two years. If the stock had performed over the last two years as well as the company's product I would be a totally happy camper. I stumbled upon subscription music only after first learning about the stock, which appeared to be an excellent speculation at the time. Since then, both the stock and the service have only gotten more attractive. I have unlimited access to over 5 million songs on three separate PCs and 3 separate mp3 players. Through the new web page (Napster 4.0) I also now have access to all my playlists on any computer with an internet connection (in addition to the 3 PCs mentioned above which have the Napster client software that controls offloading to my mp3 players and enhances access speed). As someone stated above, digital music files just aren't something one should care about owning. They are a depreciating asset. Plus, managing them is a hassle and takes up storage space. For me, having a jukebox in the sky is clearly the way to go. As for the stock, well, it's ridiculously cheap and I am amazed no one has swooped in to make a bid for the entire company. There is controversy surrounding the name, of course, since it competes with Apple, the zeitgiest darling of the moment. But the valuation of Napster is simply insane. The December quarter will be the third in a row of positive cash flow and they will do $33mm in revenue. They have about $70mm in cash and no debt. At $2 per share with 45mm fully diluted shares outstanding the market cap is $90mm and the enterprise value is $70mm. Show me another globally scalable internet business model with 750k paying subscribers that trades at 15% of revenue. That's right, EV/Sales = 0.15. Napster's problem is most definitely marketing. I recently told a highly placed executive about the service as it would be perfect for him and his two children whom he suspected were pirating music and exposing his computer to viruses, not to mention legal liability. His response: "what are you trying to do, get me arrested?" He thought Napster was still an illegal file sharing site. I don't have the solution to Napster's marketing dilemma, but it clearly needs to get the message out to its most likely target market. If I were running the company I would start by trying to appeal to parents with children who are pirating music. That is a no-brainer. They also need to lower the entry price point so that kids won't have such a strong objection. I mean college kids will spend $10 on a martini and think nothing of it, but ask them to pay for their music and they think you're nuts. Napster needs to make the landing page more interactive, more "hip," with more free access and graduated levels of premium service. A $5 subscription with access for one computer and one mp3 player makes sense if they can make the numbers work. Lastly, I think the record companies need to stop experimenting with ridiculous "business models" that have little prospect of generating revenue. They need to lower the wholesale price point and provide support for the digital retailers like Napster and Rhapsody. The farther they allow their customer base to veer from the association of music enjoyment with fair and direct compensation, the farther down the sinkhole they will go.

WTHarvey

December 19, 2007 11:38 AM

I'd focus my marketing on getting together the other subscription services. If* Sirius and XMSR can get together, so can Napster and Rhapsody or eMusic. The drawback to advertising subscriptions is that these are the people on the net that want to opt out of advertisements altogether, anyhow. Premium dues paying members are routinely given the opportunity to get the ad-less experience. They don't relate to ads, period. Branding a subscription service doesn't make sense: Once you start discovering new music, you're a 'beagle on the trail of truth'. You don't need any reminder about why you chose the service in the first place. Consolidation is the key to growth in music subscriptions.

Forrest

December 19, 2007 12:08 PM

Brandon W

December 19, 2007 1:37 PM

I'm one of the naysayers (though I don't think I was one of the ones who commented on the aforementioned article). To sell someone, you have to overcome their objections. So, here are my concerns:
* The Sansa's are pretty nice, but they still don't approach the capability or features of an iPod (especially the Touch). When am I getting those kinds of devices? If they exist, where are they?
* What happens to all that music I don't actually own if Rhapsody goes out of business?

Address those, and I might buy.

Lucky

December 19, 2007 10:57 PM


I agree with the earlier comment that consolidation will be key to success of subscription music. I do not believe a pure-play subscription-music business model can turn a profit going at it alone. On the other hand, partnerships, especially when it comes to technology partnerships not based upon industry-adopted standards, often fail to produce viable and successful solutions. Apple took complete control over the hardware and software with the iPhone, and we see the obvious success. Napster and Rhapsody cannot come close without complete cooperation from both the handheld manufacturers and the carriers.

I think Napster's best chance for success is to be acquired. For those of you that are interested, here's a list of recent acquisitions in the subscription-music space:
Ack: Nokia (NOK) Tgt: Loudeye (LOUD)
Ack: Yahoo (YHOO) Tgt: Musicmatch [PVT]
Ack: The Orchard (ORCD) Tgt: Digital Media Group (DMGI)

However, should Napster continue to go at it alone, there's no doubt in my mind it needs to spend much more on parterships, improving the user experience with their software, technology-integrations with the hardware and cellular providers, and co-branded and co-marketed offerings. Napster should seek to piggy-back on existing subscription-based services such as cellular, internet, and cable services.

The decision to subscribe to a service like Napster would be a no-brainer if it was bundled with another service and/or offered as, for example, a $5/mo additional 'feature'. Asking a parent to fork out $40-50/mo for cellular service and then an additional $15/mo for unlimited music seems like it will be met with resistence. But if music was bundled into the services, and say starting with a promotional period to try out the service for free, who knows...

One more suggestion: should the subscription-based services out there decide to play nicely with each other, they should allow users to port playlists from one service to another upon switching. It is unlikely they would do this, but the user might be more inclined to sign up for subscription-music if they knew that they could easily switch without having to build his collection all over again. The Wireless Local Number Portability action was an example of the same sort of situation. Customers benefitted from the wireless competition once they knew cellular phone numbers could be ported with ease.

Mark

December 20, 2007 7:50 AM

I'll stick to your question - marketing the subscription model.

COSTS: The debate about cost usually centers around buying a song for a buck, or renting it for 15 bucks a month, and losing it if you stop paying. On a per-song basis, this argues against subscriptions. They need to change the paradigm to "download and listen to 100 songs a month, for only 15 cents per song, or 1000 for 1.5 cents, ...". And emphasize the fact that 80% of the songs you are buying for a buck each won't be listened to very frequently. The real rip-off isn't in subscriptions, it's in charging me the same price for a song I listen to once as the price I pay for one I listen to every day for ten years (whether it’s on CD, LP, MP3). I have 3000 songs on my MP3 - that's $3000 if I buy them, whereas I can subscribe for 15 years for that amount of money. And by then I'll want a different 3000 songs. And I have probably listened to another 3000 that I didn’t bother to keep. (Lets face it – lots of music is CRAP!!!)

LONGEVITY: I think a lot of people feel like if they leave the service, they lose the music. True, unless you sign up for another service. I have already decided to dump Yahoo and switch to Rhapsody. I will simply download the music from my new provider. Will some be unavailable? Some, but not much. If it's important to me, I'll buy those few songs before my subscription expires. And after a year, if I change my mind, I'll just go back to Yahoo. My software and playlists will probably still be there. If they all used a standard for playlists, etc., they would reduce consumer anxiety on that score. Make it easy for me to be YOUR customer Rhapsody! Steal me from Yahoo!

SECURITY: Another related appeal they could use is security - ever had a hard drive die? or laptop stolen? Was your music backed up? On subscription, I get my new computer, log in and download the whole lot again.

Given these values, who should they appeal to? Today, possibly thanks to Napster and other early pirate/illegal services, they try to appeal to young tech-savvy consumers. Wrong demographic!

They should appeal to those of us who want to either recover their old music, or discover new music AND who are old enough to realize that they will not keep the same music forever. (OK some, but not all of it!) Plus - we have more money now!

In my case, I wanted to rediscover my old stuff which is long gone on LPs, cassette tapes, 8-tracks which I lost or discarded as life went on. I could have downloaded it, but do the math - 1500 songs = 1500 bucks, which is 8 years of subscription service.

Plus, I realized I was rapidly becoming an old-fart, stuck on the music I knew "back then". What are my options to learn about the new stuff? Radio (old-fashioned, internet or satellite) - up to a point. But I can't explore at my own pace and in my own direction. On a subscription service, I can instantly dig deeper on a band I discover, let the service recommend similar music, etc., etc. To the extent they can differentiate themselves from radio, they have my money.

Ever noticed how Google usually finds what you are looking for, but Yahoo search doesn't? Or how Amazon recommends based on previous purchases, recently-viewed items, etc. The Amazon of subscription music should be able to figure out what I like and present it to me. I'll pay to be given meaningful, interesting suggestions. I won't pay to receive random "New Release" lists every week.

To all those hung up on ownership - do you still own and use your first car? Who needs it - you have a newer, better one.

On the other hand, why might I want to own the music? Because I don't trust the record labels OR the services. What will the monthly fee be next year? Will my song still be there tomorrow? I have seen songs disappear - think how the record labels could mrket with subscription services. Have the whole album there, except for the big hit. Put a new album on for three months, then remove it, etc.,etc. Play games like that, and you'll lose the customer.

And speaking of demographics. My daughter uses iTunes on a PC. When she plugs it in it works - always, everywhere, flawlessly. When I plug in my MP3 player, it "usually" works, the Yahoo Unlimited Music software "usually" doesn't crash, the songs "usually" relicense properly, but every now and then I have to erase all my music from the player and start again, or follow some obscure instructions on the Yahoo FAQ. It's not just the music - it's the experience. When I was in college I didn't mind spending three consecutive evenings hacking, in fact I enjoyed it, but now I don't want to spend my time on that. I expect to log in, pick my songs, synchronize with my player and go about my business.

Subscription services may be ahead of their time. The service they offer is valued by people who won’t put up with their flaky software, and the techonology-savvy people don’t value their service - yet. Wait for the generation that were born with earphones in their ears and iPods in their chubby little fingers to turn 40. In the meantime, fix the software.

Sorry this is a bit of a ramble – I’m sure there are some cool comments in there somewhere.

Mike Schumer

December 20, 2007 10:17 AM

Remember when IPOD first came out. There was a commercial with a guy walking down the city streets listening to the sounds around him. He then went to his apartment and downloaded some songs into his IPOD. The commercial showed the world how easy it is to take this device, put some songs that you are currently in the mood to hear and play them with the twist of your thumb. Do the same thing with subscription music services. Show a bunch of people at a party asking to hear some obscure song they haven't heard in years. The user types in the name and plays the song in seconds. Show how quick and simple it can be.

Kelly Cornia

December 20, 2007 2:30 PM

I was looking around for data on how much success Rhapsody is having and came across this so I'll post my thoughts.

It is hard for me to fathom how people can't see that subscription services are the future of listening to music (I say listening because I believe there will always be collectors that want physical media, although I question whether the artists would continue to incur the expense if the vast majority of their revenue were digital). Back when we didn't have digital ubiquity I could see the value in ownership. But now I have a sansa and an ipod that I can listen to when I run, plug into my car to listen to there, and also plug into my home stereo where I can listen there. To me the real value of subscription starts from the fact that I can now listen to the subscribed music whenever I want wherever I want. With physical media this was always more of a challenge.

Now to the music. Maybe I'm different but I'm constantly wanting to listen to new and different stuff. A couple months ago I went on a country kick and was listening to Johnny Cash, Merle Haggard, Dixie Chicks, you name it. Then that passed and I started listening to house music. Totally by chance I came across the new Daft Punk album (Alive 2007, I recommend EVERYONE go listen to it) and have been hooked on it ever since. But the point is, I can be as flighty as I want with what I listen to because it's ALL there for me. Rhapsody already does an excellent job of putting new music in front of me, including both similar and totally new types of music (I created a channel full of electronic/house artists and Rhapsody stuck the Sex Pistols in there). The models above that cap the number of songs I can download in a month wouldn't work for me, and frankly they don't make much sense when I can download as much as will fit on my player already, and keep it there as long as I want.

To the question above about what would happen if they went out of business, the answer is the same as any service you pay for. You'd have to get that service from someone else. Does the fear of a company going out of business prevent you from getting cable? Of course not, and this is no different.

My original search this morning was on "iTunes subscription model". I can't believe they aren't coming up with something. I mean, no disrespect to Rhapsody or Sansa, but I'd drop both in a hot second if iTunes had an equivalent service. This is only because I use the iPod Nano+Nike shoes for running, so if Sansa were to come up with a competing product, then I'd have to compare other features.

As for marketing, they need to focus on what I mention. Ability to listen to the service anywhere now that digital is more widespread, and also the wide array of music that's available. They should focus on WHY people feel this need to own music when there's so much more value in owning it all for 15 bucks a month. I would argue that we'll see them partnering up with cable soon, so you're bundling even more types of media. If my Cable, Netflix and Rhapsoy were all bundled that would be awesome.

Brian

December 20, 2007 4:46 PM

Do you mean "market" or "advertise"?

Suzanne

December 21, 2007 12:02 AM

I don't have a paid music subscription service, but I do subscribe to XM, which I think is similar in concept. Basically I weighed how much music I could hear for a $12.95 monthly fee versus how much I could buy at $1 a song. Thousands of songs versus 156.

Plus XM does two things for me: it frees me from having to hunt for songs and download them, and it exposes me to music I might not otherwise hear.

I view music as a consumable, not an object to be owned.

If I were creating an ad, I'd probably show one guy listening to the same few songs over and over again, standing next to a guy who is checking out some of the most interesting and diverse music in the world. Now, it is true that the average person doesn't want that much diversity, but you sell the coolness factor.

In other words: owning music is boring; renting music allows for lots of experimentation.

B.J.

December 22, 2007 8:27 AM

Never understand why people pay per download when they can stream with Rhapsody... Anyway, the marketing answer is "free, free, free"! Bundle a free flash player along with Rhapsody and give it away for free. Limit the player to playing only Rhapsody streamable (if that's a word) tunes. And, since it's free, stream a 5 second commercial after every 5 songs.

Dave

December 29, 2007 12:04 AM

Here are a few of my pet peves

Stop nickel and diming subscribers - I pay for a subscription, why do I have to pay again for specific tracks

Stop posting incomplete albums - drives me nuts when I start listening to an album only to find one of the tracks is not available or I have to pay to hear it (see above)

Album art/content - I'm paying for albums and getting album art that is various sizes and quality. Why don't content providers provide pro quality art and liner notes to online users?

Web only interface - I hate having to install a player to access my music.

Lori

January 10, 2008 6:22 PM

I have a Creatative Zen V Plus -- an excellent player which definitely rivals the iPod (to Brandon W's comment) -- and Yahoo! subscription. How did I sell my friends and family on getting a Rhapsody subscription?

1) Tired of the songs on your player? Delete them all, download a whole new set of songs that you haven't heard and go. When you get tired of those, do it again -- Subscriptions are about variety, variety, variety

2) No need to sit at your computer and try to listen to a bunch of songs before selectively choosing which ones you want to actually purchase and load. Load them all -- delete the ones you don't like when you hear it: on the bus, in the office, while your walking the dog. Don't be tied to the computer trying to select and purchase music. -- Subscriptions mean convenience.

3) Got a new player? Bought a new computer? Connect via the web and grab the same playlists, download your whole music library again, or start fresh. No rights management issues, no worrying about how many "burns" you have left, no thinking about which computer has which music stored on it. Add up to three computers and three portable devices to a single subscription (this was a huge selling point to our family). I lost my first player, bought a replacement and Yahoo! synchronized the new one without a blip. When I tried to transfer my DRM music that I "purchased" from Walmart, buymusic.com and others, I ran into more error messages than music. - Subscriptions are easy on changed and upgraded hardware!

I've been a Yahoo subscriber for over a year now and look at pay-per-song option as a limiting alternative -- for the same $$$ I've spent to have over 400 songs on my Zen V Plus, I would currently have only about 180 songs via iTunes -- and I would have spent a lot more time deciding which songs those would be and missing out on the my new favorite songs and artists that I have found through downloading whole chunks of Yahoo's recommended song lists and other users playlists.

jonah

March 18, 2008 2:48 PM

Any tune, Any time, Any where
At least it's getting there with devices like Ibiza Rhapsody from Haier:
http://www.laptopmag.com/review/mp3/haier-ibiza-rhapsody.aspx

This to me will be the biggest selling point - having devices that make it exceeding easy to load tunes from your music service - anywhere there's a wifi connection. PC connectivity is optional.

I'm still amazed at how I had to stumble across this player after browsing levels deep into Rhapsody's website - why Rhapsody and Ibiza aren't teaming up to to spread the word about this awesome player and show everyone even remotely interested what the possibilities are is beyond me.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. 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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