The Infinite Dial

The odd thing about the SoundExchange controversy and the upcoming rate hike is that the labels have effectively chosen to subvert the entire system, and charge the wrong people for their inability to suss a new revenue model in the post-peer-to-peer world. Take my Sansa Wifi player, for instance--in order to get full usage out of this device, you need to subscribe to Yahoo Unlimited, which is a subscription-based all-you-can-eat music download service. For $14.95 a month, I can download unlimited (DRM-hobbled) songs and albums and listen to them on my PC, burn them to a disc, and move them to my Sansa to listen to wherever I choose. With the WiFi functionality and tight integration with Yahoo's Launchcast radio streams, I can listen to a song over a webcast stream, and with one click on my device have it downloaded to the Sansa in seconds, with no money changing hands whatsoever--it's part of my $14.95 subscription.

So consider this--I just listened to a song on Launch, clicked on it, and got it on my device for free. No friction. The new SoundExchange rates are designed to make someone pay for this, and that someone will be Launch/Yahoo for every person who hears the song on one of their streams. The subscription music model has done more to devalue and commodify music than the original Napster ever did, and now the webcasters who actually play and promote music in their streams have to bear the cost. Imagine if my doctor had to pay Wyeth for every sample of that pill that holds my stomach together he gives me, but I can refill it for free at the pharmacy. My doctor would be stupid to do that, wouldn't he?

Well, he would be--unless he jacked up my bill to compensate. With the subscription audio streaming market reaching maturity, there is really only one way to make mainstream America 'pay' more for listening to a webcast, and that is with advertising.

EDIT: For more on this, do check out Accuradio CEO Kurt Hanson's take on his new blog.