EMI Music Chairman: Music subscription services like Napster and Rhapsody haven’t beeen huge

“Nobody said it was easy for EMI, the world’s third-largest record company and the home of Coldplay, as the music industry has weathered six straight years of falling sales,” Adam Pasick reports for Reuters. “Yet EMI Chairman Eric Nicoli and others in the industry are seeing signs of hope coming from the very source of many of the industry’s woes — the Internet. Downloaded music sales on online services such as Apple Computer’s iTunes Music Store are surging, and made up 6 percent of industry revenues in 2005. Nicoli said digital revenues are now expected to offset flagging CD sales within a few years. ‘We’ve seen a tripling in the last year and we’ve hardly gotten started,’ he said this weekend in an interview with Reuters at the music industry’s annual conference in Cannes, where he also delivered the keynote address. Digital music sales topped the $1 billion mark last year, according to the International Federation of the Phonographic Industry, compared with $380 million in 2004.”

Pasick reports, “He acknowledged that in a complex and rapidly changing sector, predictions and projections are an inexact science. ‘We thought subscriptions (services such as Napster and Rhapsody that offer unlimited music for a monthly fee) would be huge — it hasn’t been,’ he said. Mobile music, apart from phone ringtunes, has also developed more slowly than many had hoped. ‘We’re at year zero — if that — with mobile,’ Nicoli said.”

Full article here.

Advertisements:
MacBook Pro. The first Mac notebook built upon Intel Core Duo with iLife ’06, Front Row and built-in iSight. Starting at $1999. Free shipping.
iMac. Twice as amazing — Intel Core Duo, iLife ’06, Front Row media experience, Apple Remote, built-in iSight. Starting at $1299. Free shipping.
iMac and MacBook Pro owners: Apple USB Modem. Easily connect to the Internet using dial-up service. $49.00.
iPod Radio Remote. Listen to FM radio on your iPod and control everything with a convenient wired remote. Just $49.
iPod. 15,000 songs. 25,000 photos. 150 hours of video. The new iPod. 30GB and 60GB models start at just $299. Free shipping.
Connect iPod to your television set with the iPod AV Cable. Just $19.

Related articles:
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service – April 11, 2005

23 Comments

  1. iTunes, your digital music to the future.

    Others, resistance is futile.

    Come and join us, for your don’t know the power of the bright side.

  2. It takes the music companies a long time to get it.. If it wasn’t for their monopolies methinks they would have gone out of business a long time ago.

    iPod and iTunes are safe for some time.. time for Applle to focus on the other nice products we are looking forward to like my iSlate – all in one phone and OSX – solar powered. Unbreakable, scratch resistant glass front with an Apple logo engraved into one corner and solar cell on the back…

    I’m dreaming but I really hope the Apple labs are hard at work on it for me!

  3. “…For years, we enjoyed repeatedly gang-raping the public with overpriced formats and lackluster offerings, but they don’t seem to want to roll over and bite the pillow for subscriptions services or ring tones. Go figure…”

  4. Wow, I’m sooo impressed w/ the Chairman of EMI… He said that music subscription services have not been a success… WOW… What a revelation!

    Why wasn’t anyone impressed when Steve J said that people didn’t want to rent their music a year ago? It’s taken the heads of the record companies this long to figure it out?

    Record companies = Dinosaurs

  5. It’s probably no surprise that the subscription market hasn’t taken off, but probably more because the service is incompatible with the iTunes/iPod platform than the fact that subscriptions are – in and of themselves – an undesirable model for the consumer.

    The simple truth now is that iPod – with over 14m units sold in the most recent quarter, effectively comprising one third of every iPod ever shipped – has become every bit as much a de facto platform as WIndows or TCP/IP. Operability with iPod is no longer an option, it has become a robust de rigueur requirement: can’t use it on or with my iPod, I’m not buying it.

    The potential commercial collapse of Napster won’t help much: the Windows Media subscription model will suddenly take on the unattractive aura of failure which actually may damage Microsoft’s aspirations in the whole entertainment content sector, including video.

    Another interesting opportunity is presented in the article, and it’s one that I’ve been banging on about for some time: the merger/acquisition opportunity that is EMI Group plc as the smallest of the four major music companies.

    Whilst Apple could leverage its market capitalisation to acquire Universal Music Group through a takeover of Vivendi-Universal, the sad truth is that it would take eighteen months to two years to unravel Vivendi’s cable and telephony interests and sell them on to interested parties such as Spain’s Telefonica – France’s broadcasting regulations, which demand a specific level of content originated in the French language, won’t help.

    However, EMI and Warner Music present a different scale of opportunity and a much easier sell to both Apple’s shareholders and those of the target.

    Purchasing EMI and Warner would cost around $7-$8 billion, however Apple could then bring some much needed vision to both businesses, combined with some reasonable pruning of duplicated functions, before re-listing the new combined operation as a majority shareholder, by selling off 30-35%, possibly recovering some $3.5 billion of the original acquisition cost.

    In my vision, Apple would benefit by becoming the controlling shareholder in a major music industry player, with interests in both recorded music distribution and music publishing, which may become attractive in distributing MIDI files for GarageBand and Apple’s other music recording products. Apple would also benefit by holding on ot a greater slice of the pie created by the growth of the digital music industry as well as being able to guide the growth of that industry.

  6. MCCFR,

    Apple can’t even get their own developers to get off their buts and produce universal binaries for their Mac software.

    What makes you think they will be able to talk the rival labels into doing something sensible.

  7. Big Al,
    As far as I know the only apple apps which are not universal binaries are the pro-apps. Apps which will be Universal shortly after the first pro-esque machine is available: the MacBook. The only people who would use an iMac for those kind of apps on a pro basis and need to upgrade to a similar machine right now are people who, no doubt would be better served by getting a Power Mac anyway.

  8. You guys should also check out eMusic.com. It is a music download service entirely focused on serving the needs of independent music fans and independent labels. It works on a different sort of subscription model…for example I have the least expensive option $9.99 per month for 40 downloads. I own these songs/albums & they are in high quality mp3 format with no DRM!

  9. The reason subscription methods don’t work is because it gives the music away too cheaply and there isn’t enough market in online sales to cover the expenses of making music.

    Artists need to make a little money and get rewarded for their efforts, most people are willing to pay a little bit more to keep the supply coming.

    The subscription method doesn’t reward the artists, it rewards the cheapster who wants everything for free.

    Supply and demand works both ways and the record labels are so greedy, busy punishing their customers with rootkits and lawsuits, they should look at starting a education campaign about personal lives of artists, what goes into making the music, all the effort involved, all the concert people, the costs involved and motivate people to do the right thing through empathy.

    But of course the RIAA and their jackbooted thug ways will just have to learn the hard way.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.