October 28, 2005

What's the Value of Music?

Yahoo has raised the price of its music subscription service. As I read this article, this quote caught my attention:

"We definitely believe that subscription is the model that most people will adopt," said Shannon Ferguson, director of Yahoo Music Europe.

I don't know what most people will adopt. Some people will definitely sign up for a subscription service. A paid subscription service is not much different from a paid radio service, like XM Radio or Sirius. The difference is that with a music subscription service, you pick your own playlist. With a paid radio service, someone else picks the playlist.

music player Then, it occurred to me: doesn't the music subscription service diminish the perceived value of the music? Even though it's a paid service, it's so much like just listening to the radio, which is free. The monthly subscription fee is small. In return for paying, you get to listen without advertisements.

Much of the value of music comes from having something -- something you can hold. What if, ten years from now, there are no new CDs manufactured? What if the only way to get music is to download it from the Internet? Will music still have its perceived value?

I'll suggest an answer to the last question. There may be no value attributed to the music. Instead, the value will be attributed to the service itself. In other words, we won't be thinking, "Is this song worth $X to me?" Instead, we will be thinking, "Is this service worth $X a month to me?"

Posted by Doug Sauder at October 28, 2005 08:31 AM