The chortling started immediately after the embargo lifted: Whadda buncha of idiots those people at SanDisk and the big music labels are! Stick albums onto flash memory cards and trying to sell them!
Wagering against the Big Music as it scrambles to stave off collapse is an easy bet. We’ve been making it for many years and haven’t lost yet. But here’s the thing: SlotMusic doesn’t sound like a terrible idea to us.
It would, mind you, if the music industry was positioning this as the answer to its woes. But to us this sounds like a reasonable way to extract a few more dollars out of brick-and-mortar shoppers, who are still responsible for the majority of the industry’s revenues.
That’s because SlotMusic won’t be sold as a replacement for CDs, but as an accessory for cell phones and other low-end hardware. We assume the tiny (important, since retail space is at a premium) flash cards will get bundled with phones and other consumer electronics, or displayed next to the gum and other impulse purchases at checkout lines. We’ve heard, anecdotally, that Sony has had a lot of success selling MP3 players preloaded with music at Wal-Mart. And this is a natural extension of the same idea. Buying a new phone? Want some Usher songs to go with that?
One very big catch: Price. The WSJ thinks the flash cards will go for $15; Saul Hansell at the NYT quotes a label exec who thinks they’ll go for as little as $7. As we’ve noted many times before, the industry’s biggest problem is that even consumers who are willing to buy music aren’t interested in the industry’s core product — the album. So if SlotMusic is going to work, the labels will have to discount album prices significantly.
That’s been proven to work — Amazon has been doing quite well hawking $5 MP3 albums — but we do fear the labels are going to argue that by adding a couple of extras, like a bonus song or two, they can justify keeping the flash cards at CD prices.
If they wise up, and treat these sales as a bonus revenue streams, like ringtones or Rock Band downloads, SlotMusic could survive for several years. If not, it will disappear as quickly as SanDisk’s last foray into digital entertainment. You remember TakeTV, right?
Business Insider Emails & Alerts
Site highlights each day to your inbox.