http://www.macworld.com/news/2007/10/12/universal/index.phpThis scheme sounds like a complete non-starter to me. What hardware manufacturer in its right mind would pay $5/month per unit sold to subsidize the "free" music? That's $60 a year, on a unit that may have cost $200 retail - and you can bet the manufacturer doesn't have a profit margin that would even begin to cover that. So what do they do? Raise the price of the players to cover the "subsidy" - and if so, by how much? If the average life of a player is even 2 years, that's $120. Sounds like a ducky way to compete with the industry leader - inferior players at substantially higher initial cost. Hmmm...yeah, that oughta work.
Nah...Universal must be expecting the Mp3 player manufacturers to just eat the cost, because after all, with all that free music, the players will just start flying off the shelves. Never mind the little detail of ever-increasing losses as you sell MORE product when your profit margin has been wiped out by the $5/mo fee!
And how do the record companies make any money off this? They presumably have to pay their artists (or maybe not - it's probably the sleaziest industry around) and $5 is only 5 downloads a month, if using the equivalent of the iTunes store charges. If the consumer doesn't have to pay, then you can be sure they'll be downloading a lot more than five songs a month!
Did Doug Morris get his business degree (assuming he has one) from the inside of a matchbook, perchance?
Interesting comments after the story - including the posts about some fairly major artists completely ditching their record companies, and going with online distribution etc. Sounds like the record industry is busily rearranging the deck chairs on the Titanic.
