Broken record: Why labels want new album format
There's not enough margin in 99 cent downloads, so the music industry wants to find the next-gen album. Let's hope it won't force unwanted tracks on listeners.
Apparently, the digital download didn't kill the album after all.
The four largest recording companies and Apple reportedly have plans to create what they hope is the next-generation album. Driving the efforts is the hope that music can once again deliver fat profits, instead of the scrawny margins earned on 99 cent downloads.
On Sunday evening, the Financial Times reported that Apple plans to entice customers to accept packaged music by throwing in "photos, lyric sheets and liner notes" and also enable consumers "to play songs directly from the interactive book without clicking back into Apple's iTunes software."
A music industry source told me the labels are working on their own interactive album format and they will offer it to Amazon and other music services. Apple and the labels are shooting to release their album versions in the fall.
Critics will undoubtedly say such plans are folly. For nearly a decade, digital technology has enabled music consumers to bust the CD into pieces and obtain only the songs they wanted. Even music industry execs have acknowledged that for too long, fans were forced to pay on the order of $15 to obtain 12 or so songs of which only two might be any good.
Whatever the next-gen album is, it can't be a vehicle that forces unwanted music on fans for premium prices.
But the music industry's dilemma was sized up candidly earlier this year by David Ring, executive vice president of business development for Universal Music Group's digital arm.
"If what we're trying to do is one-by-one downloads...that's not a business that can grow," Ring told EconMusic Conference attendees. "It won't be healthy for the industry."
What that means is that there's too little money in selling individual songs. The ailing music industry appears to be looking for ways to give people music and then entice them to dig deeper into their wallets for extras.
Earlier this month, EMI began selling the "digital 45" to mark the 60th anniversary of the vinyl 45 single. A 45 was a vinyl record that was smaller in size than the standard album and typically featured two songs, one tune on the A-side and another song on the B-side. To create a similar effect, EMI began bundling hit singles with B-sides in a download format.
When it comes to boosting margins, the labels have already achieved some success.
Last January, in an unprecedented move, iTunes maker Apple announced that it would allow the recording industry to charge something other than the traditional 99 cents per song.
Perhaps Apple and the labels can come up with content combos that people will find valuable. But the danger here is in trying to force the packages on consumers and possibly alienating them even more, which could send them sailing into new piracy waters.