Friday, November 2, 2007

Music As Amenity

Ann Althouse calls the Ritz-Carlton's complimentary iPod with 1,000 classic and contemporary music selections a "strange hotel amenity", and wonders:

Who doesn't have their own iPod? Who wants 1,000 songs loaded by the hotel? Maybe if you lost your iPod...

She's right and wrong. It's actually just a clumsy prototype of how recording companies will squeeze some revenue out of their catalogues in the age of free recorded music for the end consumer. Eventually the "one size fits all" complimentary iPod will become a progressive menu. For an imperceptible fee hidden in the basic cost of the room, you'll get the iPod (or equivalent database) loaded with a generic music library. For an extra fee, kind of like the charge for using room service or the wet bar, you'll get a library selected by cutting edge artists and a&r insiders who can no longer find work in the downsized industry. And for a little bit more, you'll get every song ever recorded since Edison.

The hotels (and airlines, car manufacturers, etc.) will pay global licensing fees. The record companies will divide them among artists based on how often the files have been accessed. And the end user will pay nothing. Or at least, that's what it will feel like, because the cost will be included in the price of the service.

Eventually, the same system will be expanded to include heavily branded consumer products (like sneakers, and certain clothing lines), whose price will also include access to corresponding mp3 libraries. The major challenge facing the industry is that in its rush to solve the revenue question, it doesn't create licensing agreements that undercut one another. If you've already got a universal song library included (for a fee) in your mp3 player, you're not going to be interested in paying extra for one in a hotel room. It will probably be trial and error -- like the Ritz-Carlton's complimentary iPod -- for a while. But the industry will ultimately find a standard it's comfortable with.

Oh, and for what it's worth, I don't own an iPod, and couldn't for the life of me imagine being aurally isolated from what's going on around me.

Posted by Judah in:  Arts & Letters   Markets & Finance   

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