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 vendors, 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 2023), 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

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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. Archived from the original on January 28, 2020. Retrieved March 27, 2016.
  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. doi:10.2139/ssrn.2688210. 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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