Adam Fields (weblog)

Assume: The music companies want to make money by selling more music.

Grant: There are a few downloadable music companies, and they’re not going away.

Posit: Given that there is at least one place where consumers can buy downloadable music, competition among the services where consumers can buy downloadable music would be beneficial – the market would grow, the services would compete for customers, and the downloadable music companies would bear the brunt of the inevitable price war, squeezed between the consumers who want to pay less and the music companies who want to charge more for their product (it seems to me that currently, the music companies will bear this cost directly).

Understand: Downloadable music formats are often tied to portable music players and propietary formats. This results in tie-in to a platform, which may be good for an individual company, but bad for the industry as a whole, by providing an artifical barrier to changing services. If consumers can’t switch, some of them are less likely to join in the first place. Those who do are still going to be less satisfied overall if the market shifts, another company or format gains dominance, and they’re prevented from moving to the new technology because of the hassle of playing their own files.

Conclude: Music companies should immediately make it easy for consumers to switch from service to service by guaranteeing that a license purchased on one is magically good for all of them. This would be good for the consumer because they would no longer be tied to any particular service. Undoubtedly, the first company that did this would find that more people wanted to purchase their product. But it would also be good for the industry as a whole, because it would foster competition in the downloadable music space and encourage more music sales.

Movies too, of course.

(Update: Cory points out that, of course, the music companies are dying to sell you the same song over and over again. I think this is probably a shrinking market, as people simply decline to switch. We haven’t seen a mass migration from a music service yet – they’re still new, there’s a lack of competition, and also the aforementioned tie-in. However, I suspect that they’ll do much better by encouraging the market to grow through distribution competition. Maybe they should propose some sort of time-limited license, say 5 years, within which you can switch, then you have to buy the transfer privilege again.)