Open music model

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The open music model is an economic and technological framework for the recording industry based on research conducted at the Massachusetts Institute of Technology. It predicts that the playback of prerecorded music will be regarded as a service rather than as individually sold products, and that the only system for the digital distribution of music that will be viable against piracy is a subscription-based system supporting file sharing and free of digital rights management. The research also indicated that US$9 per month for unlimited use would be the market clearing price at that time, but recommended $5 per month as the long-term optimal price. [1]

Contents

Since its creation in 2002, a number of its principles have been adopted throughout the recording industry, [2] and it has been cited as the basis for the business model of many music subscription services. [3] [4]

Overview

The model asserts that there are five necessary requirements for a viable commercial music digital distribution network:

#RequirementDescription
1Open file sharingusers must be free to share files with each other
2Open file formatscontent must be distributed in open formats with no DRM restrictions
3Open membership copyright holders must be able to freely register to receive payment
4Open paymentpayment should be accepted via multiple means, not a closed system
5Open competitionmultiple such systems must exist which can interoperate, not a designed monopoly

The model was proposed by Shuman Ghosemajumder in his 2002 research paper Advanced Peer-Based Technology Business Models [1] at the MIT Sloan School of Management. It was the first of several studies that found significant demand for online, open music sharing systems. [5] The following year, it was publicly referred to as the Open Music Model. [6]

The model suggests changing the way consumers interact with the digital property market: rather than being seen as a good to be purchased from online vendor, music would be treated as a service being provided by the industry, with firms based on the model serving as intermediaries between the music industry and its consumers. The model proposed giving consumers unlimited access to music for the price of $5 per month [1] ($8 in 2021), based on research showing that this could be a long-term optimal price, expected to bring in a total revenue of over US$3 billion per year. [1]

The research demonstrated the demand for third-party file sharing programs. Insofar as the interest for a particular piece of digital property is high, and the risk of acquiring the good via illegitimate means is low, people will naturally flock towards third-party services such as Napster and Morpheus (more recently, Bittorrent and The Pirate Bay). [1]

The research showed that consumers would use file sharing services not primarily due to cost but because of convenience, indicating that services which provided access to the most music would be the most successful. [1]

Industry adoption

The model predicted the failure of online music distribution systems based on digital rights management. [6] [7]

Criticisms of the model included that it would not eliminate the issue of piracy. [8] Others countered that it was in fact the most viable solution to piracy, [9] since piracy was "inevitable". [10] Supporters argued that it offered a superior alternative to the current law-enforcement based methods used by the recording industry. [11] One startup in Germany, Playment, announced plans to adapt the entire model to a commercial setting as the basis for its business model. [12]

Several aspects of the model have been adopted by the recording industry and its partners over time:

Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven't worked, and may never work, to halt music piracy.

– Steve Jobs, Thoughts on Music [13] open letter, 2007

See also

Related Research Articles

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<span class="mw-page-title-main">Digital music store</span> Online retailer of audio files

A digital music store is a business that sells digital audio files of music recordings over the Internet. Customers gain ownership of a license to use the files, in contrast to a music streaming service, where they listen to recordings without gaining ownership. Customers pay either for each recording or on a subscription basis. Online music stores generally also offer partial streaming previews of songs, with some songs even available for full length listening. They typically show a picture of the album art or of the performer or band for each song. Some online music stores also sell recorded speech files, such as podcasts, and video files of movies.

FairPlay is a digital rights management (DRM) technology developed by Apple Inc. It is built into the MP4 multimedia file format as an encrypted AAC audio layer, and was used until April 2009 by the company to protect copyrighted works sold through iTunes Store, allowing only authorized devices to play the content.

eMusic Online music and audiobook store

eMusic is an online music and audiobook store that operates by subscription. In exchange for a monthly subscription eMusic users can download a fixed number of MP3 tracks per month. eMusic was established in 1998, is headquartered in New York City with an office in London, and is owned by TriPlay.

<span class="mw-page-title-main">Napster (pay service)</span> Napsters music subscription service between 2003-2011; aka Napster 2.0

Napster, commonly known as “Napster 2.0”, was a music streaming service and digital music store, launched by Roxio in 2003 under the purchased name and trademarks of former free peer-to-peer file sharing software Napster in the aftermath of the latter's 2002 bankruptcy and subsequent shut down after a series of legal actions taken by the RIAA. Roxio purchased Napster and a music streaming service called PressPlay in 2003, to create a new legal online music service that lets users access music through a subscription or on a fee-per-song basis. Napster was later acquired by Best Buy. The service was acquired by rival Rhapsody in 2011.

Napster is a music streaming service based in Seattle, Washington. Napster started as an audio search engine named Aladdin that was purchased by Listen.com in May 2001 and became the basis for its new streaming service, called Rhapsody, that launched in December of the same year. Based on the Open Music Model principles, Rhapsody was the first streaming on-demand music subscription service to offer unlimited access to a large library of digital music for a flat monthly fee. In August 2003, internet media behemoth RealNetworks, anticipating the launch of Apple's iTunes store, acquired Rhapsody. On April 6, 2010, Rhapsody relaunched as a standalone company, separate from former parent RealNetworks. Downloaded files come with restrictions on their use, enforced by Helix, Rhapsody's version of digital rights management enforced on AAC+ or WMA files.

<span class="mw-page-title-main">Audible (service)</span> Online audiobook and podcast service

Audible is an American online audiobook and podcast service that allows users to purchase and stream audiobooks and other forms of spoken word content. This content can be purchased individually or under a subscription model where the user receives "credits" that can be redeemed for content monthly and receive access to a curated on-demand library of content. Audible is the United States' largest audiobook producer and retailer. The service is owned by Audible, a wholly-owned subsidiary of Amazon.com, Inc., headquartered in Newark, New Jersey.

Yahoo! Music Unlimited was an on-demand online music service launched on May 10, 2005 and provided by Yahoo! Music. The service was discontinued on September 30, 2008.

SpiralFrog was a very early music streaming service based in New York City that launched in the United States and Canada on September 17, 2007. SpiralFrog offered free and legal music downloads, all supported by advertising, and was the largest site of its kind in North America. On March 19, 2009, SpiralFrog terminated operations due to loan recalls. While SpiralFrog was not successful in the end, it nonetheless helped shaped the digital music industry shift from the purchase to streaming models, and its ultimate revenue recovery

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inMusic was a Canadian music news portal and an online music store. The music store had over 2 million tracks in English and French from various genres. Samples of 30 seconds for each song were offered at no charge. Purchases and downloads could be transferred to a CD or compatible digital music device.

Digital rights management (DRM) is the management of legal access to digital content. Various tools or technological protection measures (TPM) like access control technologies, can restrict the use of proprietary hardware and copyrighted works. DRM technologies govern the use, modification and distribution of copyrighted works and of systems that enforce these policies within devices. DRM technologies include licensing agreements and encryption.

Spotify is a proprietary Swedish audio streaming and media services provider founded on 23 April 2006 by Daniel Ek and Martin Lorentzon. It is one of the largest music streaming service providers, with over 515 million monthly active users, including 210 million paying subscribers, as of March 2023. Spotify is listed on the New York Stock Exchange in the form of American depositary receipts.

In the first decade of the 21st century, the rise of digital media on the internet and computers as a central and primary means to record, distribute, store, and play music caused widespread economic changes in the music industry. The rise of digital media with high-speed internet access fundamentally changed the relationships between artists, record companies, promoters, retail music stores, the technology industry, and consumers. The rise of digital music consumption options contributed to several fundamental changes in consumption. One significant change in the music industry was the remarkable decline of conventional album sales on CD and vinyl. With the à la carte sales models increasing in popularity, consumers no longer downloaded entire albums but rather chose single songs.

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<span class="mw-page-title-main">Music piracy</span> Copying and distribution of music without the consent of creators or copyright holders

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<span class="mw-page-title-main">GhostTunes</span>

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The second decade of the 21st century has continued to usher in new technologies and devices built on the technological foundation established in the previous decade. Technologically speaking, our personal devices and lives have evolved symbiotically, with the personal computer at the center of our daily communications, entertainment, and education. What has changed is accessibility and versatility; users can now perform the same functions and activities of their personal computer on a wide range of devices: smartphones, tablets, and even more recently, smart watches. The increase in personal computing capacity has a profound impact on the way people listen to, promote, and create music.

References

  1. 1 2 3 4 5 6 Shuman Ghosemajumder (May 10, 2002). Advanced Peer-Based Technology Business Models (Thesis). MIT Sloan School of Management. hdl:1721.1/8438.
  2. ↑ Gautham Somraj Koorma (November 27, 2015). "On-Demand Music Streaming to battle Piracy". iRunway.
  3. ↑ Marco Consoli (July 3, 2014). "Spotify, il business folle sbarca a Wall Street". L'Espresso .
  4. ↑ Karol Kopańko (June 5, 2015). "Dla użytkowników streaming muzyki jest spełnieniem marzeń, a dla wytwórni – źródłem obaw". Gazeta.pl.
  5. ↑ Alagoa, Hans (November 9, 2015). "A Review of Digital Marketing Influences on the Music Industry and a Vision of the Industry in the Next 5 Years". Rochester, NY. SSRN   2688210.{{cite journal}}: Cite journal requires |journal= (help)
  6. 1 2 Ruth Suehle (November 3, 2011). "The DRM graveyard: A brief history of digital rights management in music". Red Hat Magazine.
  7. ↑ Emanuele Lunadei; Christian Valdiva Torres; Erik Cambria (May 18, 2014). "Collective Copyright". Proceedings of the 23rd International Conference on World Wide Web. International World Wide Web Conference 2014. pp. 1103–1108. doi:10.1145/2567948.2602197. ISBN   9781450327459. S2CID   16332051.
  8. ↑ Sungwon Peter Choe (2006). "Music Distribution: Technology and the Value of Art in Society". KAIST.
  9. ↑ Andrew Traub (November 25, 2009). "Open music model". US Intellectual Property Law. Archived from the original on January 1, 2011.
  10. ↑ Yrjö Raivio (December 4, 2009). "Mobile Services and the Internet: A Study of Emerging Business Models" (PDF). Helsinki University of Technology.
  11. ↑ Matěj Myška (December 2007). "Flat Fee Music" (PDF). Masaryk University Journal of Law and Technology. Archived from the original (PDF) on July 18, 2011.
  12. ↑ Playment. "Playment – Our Solution". playment.com. Archived from the original on June 19, 2012. Retrieved June 15, 2010.
  13. 1 2 Steve Jobs (February 6, 2007). "Thoughts on Music". Apple Inc.
  14. ↑ Marshall Kirkpatrick (September 25, 2007). "Amazon MP3 Launches DRM-Free Music Store". ReadWriteWeb. Archived from the original on May 10, 2012. Retrieved June 16, 2010.
  15. ↑ Peter Cohen (January 6, 2009). "iTunes Store goes DRM-free". MacWorld.
  16. ↑ Kit Eaton (April 26, 2010). "Rhapsody First Subscription Service in U.S. to Offer Offline Music on iPhone". FastCompany.
  17. ↑ Erik Rasmussen (November 16, 2011). "Cloud Music and iTunes Match".
  18. ↑ Charlie Sorrel (July 14, 2011). "Spotify Launches in the U.S at Last". Wired .
  19. ↑ "Napster and the proliferation of OMM (Open Music Model) | Metal Insider". March 21, 2019. Retrieved November 7, 2021.
  20. ↑ Sharma, Prajwal (September 12, 2021). "Why is PinkPantheress' Just a Waste Not On Spotify?". Otakukart. Retrieved November 7, 2021.
  21. ↑ Jefferson Graham (June 24, 2015). "First Look – Google Play Music has 1000s of free music playlists". USA Today .
  22. ↑ http://www.windowsobserver.com/2014/06/12/the-gotchas-of-the-amazon-prime-music-service/
  23. ↑ Popper, Ben; Singleton, Micah (June 8, 2015). "Apple announces its streaming music service, Apple Music". The Verge . Vox Media. Archived from the original on June 9, 2015. Retrieved June 8, 2015.
  24. ↑ "CPI Home : U.S. Bureau of Labor Statistics". www.bls.gov. Retrieved November 7, 2021.
  25. ↑ "Apple Music". Apple. Retrieved November 7, 2021.
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