Playlouder: The first "Media Service Provider"
One of the more interesting people that I met at the recent Telco 2.0 event was Paul Sanders of Playlouder who are in the process of launching a specialised ISP targeting music lovers who want to stay on the right side of the law. The Unique Selling Point of the service is that for the price of your ISP connection (£18/month) you can legally download as much music as you like from the service.
Even better is that the format of the download is VBR (high quality MP3) and contains no DRM protection, so you can easily transfer it from your PC to your mobile or iPod or even burn to CD for listening on the go. This is a much better concept than the DRM loaded, only while you subscribe, Omnifone model. The only potential downside I can see for the service is if the music catalogue is limited: Playlouder has already licensed EMI back catalogue and Paul hinted at more deals in the pipeline.
This fits very much in with the general premise that the industry is on the verge of seeing niche focused ISPs emerging (see also the recent launch of a gaming service from Plusnet) and the explosion of wholesale opportunities in the BSP (Broadband Service Provider) space. In fact, Playlouder doesn't refer to themselves as an ISP, but a Media Service Provider (MSP). This obviously reflects the value-add Playlouder are providing in the sphere of digital music management.
First of all, Playlouder are the people dealing with licensing of music from the record companies and performing rights society. Although Paul was extremely diplomatic, I suspect this aspect of the business is about as pleasant as root canal treatment at the dentist - without the drugs to nullify the pain. Second, there is the problem of dealing with potentially a multi-million digital record collection. Here, Playlouder has past form and operate another company, State51, which deals with digital distribution for independent record labels. Finally, it appears that Playlouder are building community software for their punters with playlists, recommendations and chat facilities.
Playlouder performed an independent survey of 800 UK Broadband users to see if there was demand for the service:
The beauty to me of the service is the timing - these days the Music Industry seems to be full of really desperate companies and therefore it should be of no surprise that it is a constant source of business model innovation. Usually Innovation brings its partner, the law of unintended consequences, along to the party. When Apple launched the iTunes store service in 2003, it was met with almost universal acclaim by the record companies as the perfect antidote to the free downloading curse. Four long years on and the record companies are feeling the effect of unbundling the album in their pockets - people are just now buying one or two tracks instead of the whole album.
The crazy part of the situation is that as the record companies suffer, music today seems to be more important than ever for consumers. In a great article which puts the case for flat price licensing, Gerd Leonard, explains the dilemma:
As an aside, the work on broadband business models is one of the more interesting pieces of work I have ever been involved with and I am particularly proud of the current work which is due to be published in Nov 2007.
Even better is that the format of the download is VBR (high quality MP3) and contains no DRM protection, so you can easily transfer it from your PC to your mobile or iPod or even burn to CD for listening on the go. This is a much better concept than the DRM loaded, only while you subscribe, Omnifone model. The only potential downside I can see for the service is if the music catalogue is limited: Playlouder has already licensed EMI back catalogue and Paul hinted at more deals in the pipeline.
This fits very much in with the general premise that the industry is on the verge of seeing niche focused ISPs emerging (see also the recent launch of a gaming service from Plusnet) and the explosion of wholesale opportunities in the BSP (Broadband Service Provider) space. In fact, Playlouder doesn't refer to themselves as an ISP, but a Media Service Provider (MSP). This obviously reflects the value-add Playlouder are providing in the sphere of digital music management.
First of all, Playlouder are the people dealing with licensing of music from the record companies and performing rights society. Although Paul was extremely diplomatic, I suspect this aspect of the business is about as pleasant as root canal treatment at the dentist - without the drugs to nullify the pain. Second, there is the problem of dealing with potentially a multi-million digital record collection. Here, Playlouder has past form and operate another company, State51, which deals with digital distribution for independent record labels. Finally, it appears that Playlouder are building community software for their punters with playlists, recommendations and chat facilities.
Playlouder performed an independent survey of 800 UK Broadband users to see if there was demand for the service:
- 75% agreed that the MSP service is “a great idea”
- 61% agreed “it is unique”
- 32% said that they “have been waiting for a service like this”
- There was strong appeal across the board but some segments showed stronger intent (Younger females and students, Online purchasers, Early adopters and Regular file-sharers); and
- Of those who found the service appealing, at least 25% regularly buy CDs, DVDs, gig tickets and music merchandise online
- £10 per month (€14.30) was considered to be the most reasonable price (using an unprompted analysis method)
- Even at much higher price points a significant proportion said that they thought the price would be “reasonable”
- 15% said they would definitely or almost certainly sign up at a £10 per month premium to standard broadband cost
- This equates to a current UK customer base of more than 2 million
- This would generate £250 million per year (€360 million) in revenues for just the UK
- 70% said they would consider switching to another ISP that was offering the service
- 61% said that if their current ISP offered the service it would definitely/almost certainly keep them loyal
The beauty to me of the service is the timing - these days the Music Industry seems to be full of really desperate companies and therefore it should be of no surprise that it is a constant source of business model innovation. Usually Innovation brings its partner, the law of unintended consequences, along to the party. When Apple launched the iTunes store service in 2003, it was met with almost universal acclaim by the record companies as the perfect antidote to the free downloading curse. Four long years on and the record companies are feeling the effect of unbundling the album in their pockets - people are just now buying one or two tracks instead of the whole album.
The crazy part of the situation is that as the record companies suffer, music today seems to be more important than ever for consumers. In a great article which puts the case for flat price licensing, Gerd Leonard, explains the dilemma:
Basically, what’s happening is that a much higher percentage of the total population is actually buying music today (32% of the U.S. population in 2006, versus 20% in 1980), BUT (and this is a very big but) the amount spend per capita has been almost halved – and that does not even account for inflation since $100 is obviously worth a lot less now than it was in 1980. In fact, what cost $100 in 1980 would cost $267.76 in 2006 so $198 back in 1980 would be $530 today - I guess one could safely summarize that if we adjust for inflation it has actually shrunk by 75%!Desperate Times = Radical Rethinking of the Business Model = Opportunity.
As an aside, the work on broadband business models is one of the more interesting pieces of work I have ever been involved with and I am particularly proud of the current work which is due to be published in Nov 2007.
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