Subscription Question Goes 2.0, Theoretical Possibilities Abound

Subscription-based formats sputtered once again last year, but visionaries remain attached to the possibilities.

In the current terrain, consumers continue to lean heavily towards ownership of discrete downloads – whether paid or stolen.  Yet Asian markets continue to offer hope for subscription-based models.  “On the other side of the world, users are much more comfortable with the server in the sky,” commented music-focused Motorola executive Chris White during a recent Consumer Electronics Show (CES) roundtable in Las Vegas.

White is referring to a mobile-heavy media landscape, one that finds consumers willingly opening their wallets for ringtones, full-track downloads, ringback tones, and video content.  But back in North America, the story has been quite different, and that raises questions over whether subscription-based formats can survive – either online or on-deck.

Perhaps the problem is that subscription is theoretically neat, but practically disconnected.  Most music fans have unlimited access to music ownership on LimeWire, and that makes a monthly fee seem superfluous.  And both Napster and Rhapsody have long been excluded from the iPod, and therefore, the consciousness of most music consumers.

Those are tired problems without immediate solutions, though leading music attorney Kenneth Hertz outlined a much different possibility on Sunday.  “This is the year that labels will embrace blanket licensing,” Hertz declared, pointing to a unilateral licensing shift that would lower legal messiness in favor of broad-based permissions.

That sounds like heresy to some label executives, and not the future that players like Napster envisioned.  But already, some action is happening on the blanket licensing front.  Just recently, Universal Music Group agreed to bundle its catalog into upcoming, high-end Nokia devices, yet devilish DRM threatens to sully the experience.  A broader, DRM-free licensing initiative could finally lure music fans, though continued sales drops may be needed to motivate such a radical change by major labels.

Report by publisher Paul Resnikoff in Las Vegas.