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Sean Ryan used to work as one of the suits at Real/Rhapsody/Listen.com. Based on his experiences, he's not a big fan of the online world:
I think digital music will eventually be extremely profitable for the content providers, including publishers, but I struggle to find a business model for the middle man in this business, at least for any model which requires broad label rights. And when you consider the joys of the mobile music sector, where you have both a concentrated supply chain AND a concentrated customer base (4 -6 carriers), you begin to see why I find that sector to just be a disaster in spite of the hype.
I think I like the sound of being in the position of extreme profit.
Raghav chimes in, adding
Big retailers [Best Buy et al -- Casper] also have lots of other products to draw people in. Distribution will be key, which is why I think mobile carriers will profit from digital music (as long as they don't get greedy and continue to charge $3 for a song). Radio stations are also well placed given their broad distribution via their real estate on the dial.
...With all of that said, there are a few areas of opportunity (though I'm sure I've missed out on many):Niche aggregator/retail. While Amazon, etc. have deep catalog, their scope is broad. That leaves room for niche players focusing on a certain niche like CDBaby and others (thanks to Chris Anderson's timely post on this topic).
Filters. As the quantity of easily available music grows, the role of filters grows. There are a good number of players in this area already but no one dominates, with Amazon's closed recommendation system probably being the largest, followed by Apple's iMix. Still lots of room for innovation as neither of these are a robust solution to the problem. Musicmobs is trying to be the del.icio.us of playlists, which is an interesting approach.
- Search. Again the offerings out now aren't very robust. Blinkx & GoFish are two startsup in this category though there are probably others flying below the radar.
- Services. I'm a big believer in Web-based services. Besides music rental, podcasting-related services immediately come to mind, but there are others (one of which I can't yet write about).
I'm of the opinion that the search option could be interesting -- particularly if Google gets their act together with indexing binary files.
Thanks to Gerd for the tip.
Posted by Casper at August 11, 2005 09:58 PM