Buy the hardware, get the music for free?

There's a fascinating story in the upcoming Business Week about a new business idea being floated by Universal Music chief Doug Morris. Universal would offer some portion of its catalog under a new service tentatively named Total Music. Users would buy Total Music-enabled devices, and get access to this music for free. No per-download charges, no monthly subscription fee, no advertising. Apparently, Sony and Warner have signed on to the idea, which would give Total Music access to the catalogs of three out of four majors.

The labels and artists and copyright holders have to make money somehow, right? Of course, and that's the catch: instead of users paying for music, the manufacturers or distributors of Total Music devices--think cellphone handset makers and carriers, or companies like Microsoft and SanDisk--would pay the labels $5 per unit per month. It would be up to them how and whether they wanted to pass this cost along to consumers. In the case of a cellphone carrier like Verizon, they might bury the charge in customers' monthly bills. Handset makers might charge about $90 extra, based on the average replacement time of 18 months. And Microsoft, which has shown its willingness to accept sizeable losses in order to conquer a new market, might even eat the extra cost to give the Zune a leg up on Apple's iPod.

Of course, it's just an unconfirmed story at this point, and many details aren't known: the number of songs available, the formats, the DRM situation, the royalty split with copyright holders, and interface/usability issues could all sink the service. Even so, it's a welcome change from the sclerotic yesteryear thinking that's categorized the music industry's response to the digital era for the last decade. As they say, the first step in solving a problem is acknowledging that there is a problem.