Online Media Cultist

The Department of Justice approved the merger of Sirius Satellite Radio with XM yesterday, combining the two major satellite radio companies in the U.S. market.

I hope the merger ends up being a good thing for the industry and consumers both, and more than anything doesn’t mess up what I think is a fabulous service. I only started using satellite radio recently, and I have to say that I love it feverishly at the moment.

I’ve known for a long time that terrestrial radio is terrible from a vague intellectual perspective, having long ago switched to CDs, MP3s, and the occasional podcast (would love to listen to more but it’s a clunky transition) while in the car. Getting Sirius reminded me of the galaxy of great music that’s out there and reunited me with the Howard Stern show after being away for far too long.

And for the online angle, I listen to Sirius’ online feed whenever I get the chance. Turn it on, get to work, and let people who know more about music than you deliver you the goods. The Underground Garage station is amazing, bringing “the coolest rock n’ roll records,” produced by Little Steven. Just last night I heard a crazy array of unearthed treasures from the ’50s through the punk era ’70s from the likes of Minx Jaguar and The Creation.

As for Stern, say what you like about him (and he certainly goes a little too far at times) but he’s fabulously entertaining over an astonishing four-hour show each day. Just this week I enjoyed a surprisingly interesting interview with Senator Arlen Specter, the return of a lost dog to a distraught woman in New York who called in, and a hysterical and lengthy tirade from Tracy Morgan. I also bore witness to a slice of history via something called Master Tape Theater, which digs into the 25-ish year history of shows in the vault. A show from September 1987 featured an interview with Whoopi Goldberg, Jessica Hahn, and Gorbachev and arms control news talk.

In any event, Silicon Alley Insider gleefully points out the large list of competitors that even a combined Sirius-XM satellite radio force will face, including HD radio, MP3 players, Internet radio, cell phones, new fangled digital radio systems. Fair enough, but I think and hope that it will force all comers to create or provide superior content. Consumers will rightfully pay for the service or hardware that best provides value.

For now I’m sticking with satellite, and don’t expect to turn back to terrestrial radio or to a new device for a long while.

If Apple can pull the trigger on a potential deal with major music companies to offer a “radical new business model that would give customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices,” it could be a game changer.

The fact that music companies are even considering this deal shows you the very real and dire straits that they’re in. Music is alive and well and doing great, but the industry is crumbling, and we might be seeing a new order rising from the ashes very shortly.

Part of the equation for consumers is whether or not they’re willing to forego “ownership” of music for a model where they have access to a huge library with the ability to “keep” only selected tracks. This path also is somewhat contrary to the current trend of eliminating DRM from downloaded tracks. Instead of offering unlimited acces, the somewhat ironically termed “unlimited music bundle” model would tie access to the iTunes library to select Apple devices. In other words, you can listen to the entire iTunes library, but only on your iPhone or iPod. (And perhaps for only limited periods of time, like 30 days or so before the download “expires”?)

MG Siegler notes that this deal could be a way for Apple to jack up prices on highly profitable iPods by leveraging the less profitable iTunes Store. And the price point will also be crucial – where will the upfront and monthly cost come in and how willing will consumers be in shelling out for it?

Some notes on numbers from Valleywag: “Labels are looking to get as much as $100 from iPod buyers and $8 a month from iPhone subscribers. Both sides are really fighting over how much of the profit from music they’ll keep.”

As for me, I just got Sirius satellite radio recently and I’m loving it. Maybe I’m just at the age and level of business where it’s really nice to be able to stream in great music across a wide variety of channels without taking the effort to hunt for it on my own. Or maybe I’m part of that evolution of consumers who can begin to live without ownership of music?

Just don’t take my Pointer Sisters cassette tape away from me. Sometimes you just gotta do the Neutron Dance.

It’s funny, just last week I dug Led Zeppelin’s Physical Graffiti out of a dusty corner, put it on, and was blown away all over again. While I can’t claim that it was on original vinyl, it was the very first CD that I ever purchased, sometime in the late ’80s. It’s a great record, with some relatively lesser known Led Zep masterpieces such as “Kashmir,” “In My Time of Dying,” and “Trampled Underfoot” to its credit.

And amazing as it seems in this era of iTunes and iPods and bling bling ringtones, Led Zeppeling has just announced that its entire musical catalog will be made available for purchase online for the first time. In fact, the band has decided to go full tilt as 2007 draws to a close (and the band nears its 40th year of existence!) with ring tones provided by partner Verizon Wireless and a reunion concert scheduled for next month.

CrunchGear notes that the timing of this deal may be due to Led Zep co-founders Jimmy Page and Robert Plant settling longstanding differences.

What does this mean in terms of the present and future of music online? Probably not a great deal, but it’s interesting to see that ring tones now seem to be a standard piece of big music deals, and the very fact that a legendary rock band’s wares were not until now available for purchase online is in of itself an anomaly.

Call me crazy (and people do!) but there’s something that happens when you hang out at a Starbucks. Not so much when you just run in to grab a mountain of caffeination before work or a roadie, but I’m talking about those times when you happen to on an outing with friends, drinking coffee (I go for the old fashioned coffee-and-milk, nothing fancy for me, thanks), doing work, and so on.

The music sounds good, doesn’t it? Maybe it’s the caffeine – which I swear Starbucks doles out in crack-like addictive quantities – but I personally start to get down with stuff I would never listen to ordinarily. Sometimes I need to shake myself out of it with a shudder… Dave Matthews, no!

And I’ve had conversations with friends about whether or not purchasing music at a Starbucks (we’ve all seen those little displays at the register) constitutes some form of “selling out,” whatever that means.

This is all to say that Starbucks does a fantastic job of piping a secondary offering (music) to its in-store customers.

Further, I think it’s a pretty great idea that Starbucks has teamed with iTunes to give away 1.5 million “Song of the Day” cards that are redeemable at the iTunes store. This all ties into a third thing that people like to do in Starbucks: hop on the WiFi and play with the Interwebs.

If you’re on a computer in a Starbucks with a coupon for a free download of a song you’re digging at that very moment that’s playing on the overhead speakers, you’re in a prime position to be motivated to redeem it. And then it’s all too easy (read = addictive, I’ve been there!) to take the next step to start clicking the “purchase” button and start jamming down $.99 downloads over the high-speed pipes.

I’d be surprised if this program isn’t highly successful, and I think that we’re going to see much more of this kind of online-offline interaction in the future.

In a piece entitled “Bookstores Begin Slow Descent Into Obsolescence,” Scott Karp eloquently describes the growing sense I’ve also felt over the past few years while browsing record and book stores.

It strikes me – at first with amusement but increasingly with a sense of frustration – each time I’m in a particular kind of store (book store, music store, video store) looking for a particular item. I have money in my pocket, ready to purchase an item and therefore help the parent company’s bottom line. If the corporate gods could look down upon me a la Clash of the Titans, they would be rooting me on saying, Come on Eric, lay down that green on the register, more money for us to help build a Starbucks outside of the Olympic Palace!

But very often, the store doesn’t have the item that I want. For example, I was at my local Borders the other day when it struck me that there are a bunch of bands that I would love to add to my collection, Citizen Fish and Frank Black and Brother Ali among them. Now, granted, Borders music sections don’t have the world’s largest selection, but I figured I might catch a sampling of these eclectic but fairly well known acts. But alas, it was not to be, zilch across all fronts. Sure, Borders would have been more than happy to try to dig this stuff up for me and order it (at hefty shopping mall retail rates) but the bottom line was that I had to leave the store with money still in my pocket. No Starbucks for Mt. Olympus.

There’s some level of human service and social interaction that brick-and-mortar stores will always provide, which is partly why I think adding coffee shops to bookstores has proven so popular. But the Internet is just too efficient, too scalable, too useful, and too relevant to allow bookstores and music stores to have any hope of competing on an even footing.

Corporate chains like Borders and Virgin may have wiped out a bunch of mom-and-pop shops, but Amazon and iTunes will wipe out the corporate chains.

Scott Karp also does a great job in looking at the eventual demise of many kinds of print books, particularly non-fiction and business books. I love this line:

Instead of writing this blog over the past year, I could have written a business book — but how much less interesting that would have been.

Absolutely right. I love Scott’s Publishing 2.0; it’s like a college course in online publishing and advertising that rolls out in digestible snippets each day. If he did write the business book instead, it’s very unlikely that I would ever stumble across it, and more than likely it would be far less relevant as it would have had to get filtered and delayed through a lengthy editing and print publishing and print media distribution process.

Scott says that he’s done with bookstores, particularly because he’s not that into fiction. I do still enjoy browsing the fiction stacks every now and again, and in fact just picked up a large and old John Le Carre tome (The Honourable Schoolboy, I think it’s called) along with a newer literary thriller that looked interesting just yesterday.

But more often than not I use Amazon to buy books.

DRM, Digital Rights Management, is a technical means of restricting the use of media. In other words, it can control how many times an MP3 can be played, for example, or how many devices it can be played on, how many times it can be downloaded, and so on.

This was thought to be a great way for music labels to distribute music online while protecting their intellectual property. The problem is that people don’t like DRM, and many hate it. When you purchase a CD, your expectation is that you can play it at home, in the car, at the office, and while on the exercise bike at the gym. People therefore expect to be able to do whatever they want with a legally purchased MP3.

And the reality of course is that music labels are hemorrhaging cash anyway. Steve Jobs, Apple’s CEO, opened the floodgates to lifting DRM restrictions in a well written essay several months back that urged the labels to allow music to be sold on iTunes DRM-free.

Now we’re starting to see some major changes in the works. Wal-Mart, one of the biggest brick-and-mortar sellers of music, announced that it had signed on with a bunch of labels to offer DRM-free music for purchase online.

Meanwhile, start-up gBox is looking to tap into the new DRM-free wave by offering a service that lets people create wish lists and purchase DRM-free MP3s for friends.

Beyond music purchase, streaming services – both free and paid – are now plentiful. The thinking here is that people don’t really need to “own” music anymore if they can access whatever they want whenever they want it, and from wherever. Rhapsody, which has been around for quite a while, has hooked up with Viacom (and MTV, which it owns) in an effort to penetrate a larger share of this growing market.

And services like Anywhere.fm are creating ways to access your iTunes library from anyplace with an Internet connection.

GigaOM notes that EMI Music and Universal Music Group are already offering DRM-free music, and that “When it comes to DRM free music — that is, music not encumbered by copyright restrictions — the pitchers are still throwing their warm-up pitches.” And Techdirt rightly points out that people can care less what label music is released through – they just want what they want, and will flock to wherever that need can be best met.

Personally, I’m old school and like the feeling of “owning” my music. However, I believe the future of online music will be for the most part free, streaming, and advertising-supported. Think about a service that allows you instantly access any song you want in the known universe from wherever you want, whenever you want. Maybe the basic service is free with some relatively unobtrusive ads, and a paid subscription layer that lets you download a set number of songs (DRM-free, of course!) each month, create favorite lists, advanced social networking features, and so on.

I think that’s where things are headed, and we’re just at the very beginning of this process.

It’s always interesting to hear what celebrities and politicians have to say about things that are… outside of their milieu, shall we put it?

While Sir Elton John admitted to the UK’s The Sun that “I am the biggest technophobe of all time,” the famous musician went on to say that he would like to shut down the Internet because, “I’m sure, as far as music goes, it would be far more interesting than it is today.”

This is my favorite quote though:

Let’s get out in the streets and march and protest instead of sitting at home and blogging.

Why does everyone need to be hating on the bloggers?

What did we do to kill the music?

Maybe record labels are finally starting to get it. Well, they have to start getting it pretty soon, because there’s nothing like the prospect of extinction to get those innovation-juices flowing.

The latest indication that record labels are starting to meet the demands of today’s marketplace is Amazon’s announcement that it is launching a digital music store later this year that will sell millions of songs from more than 12,000 record labels, all DRM-free.

DRM, or Digital Rights Management, refers to technology that restricts the use of purchased digital content. In English that means that when you purchase an MP3 with DRM attached to it, you don’t actually own the music, you just have some right to use it. So DRM could restrict you from burning an MP3 that you purchased to CD, for example, or downloading it more than once.

So going DRM-free lifts all of these restrictions, including one that annoys many music lovers: restricting playback to one type of music device. Apple, a company that is often accused of imposing too many restrictions on its users, opened the door to a new era of DRM-free digital content when CEO Steve Jobs issued a passionate and intelligent analysis called “Thoughts on Music” back in February.

The key, of course, is getting major record labels to agree to DRM-free and it looks like that is finally beginning to happen. EMI, for one, is willing to sell DRM-free music at a “premium price” of $1.29 per song versus the standard $.99 that iTunes songs usually go for. The higher pricing, in my view, is somewhat irrelevant as prices will be adjusted to meet market demand. EMI is also signed on with Amazon’s new venture.

David Card notes that Amazon is in a solid position to compete with major digital music stores: “Amazon’s a master of upselling, and has zero customer acquisition costs. It should do just as well as any other store, likely better.” And hypebot notes “exclusively” that while it was announced that the new Amazon store is slated to launch later this year, that Amazon is pushing to get it rolled as early as this summer.