8 feels like free music business models

Consumers are getting more and more confused. Free music is everywhere, but is it legal music? And, is it really free? Or are you paying your music in a different way than you did before? Or is a third party financing this music? I have identified 8 'music feels like free models' for you. Some models are still great innovations, other models are becoming more mainstream.

1. Advertising funded

Some music models are advertising supported. Examples of this businessmodel are Fabchannel, Spiral frog or We7. Advertsing income is used to cover the costs of music. Advertising can be served in various ways. Instream advertisements, bannering, buttons, pre-rolls or postrolls. The radio and television industry is using the advertising model for years. For the (digital) music industry this model is relatively new. 

2. Mobile music subscription model

Examples of this model are TDC in Denmark and Nokia's Comes With Music. Consumers are buying a handset with music included. The price of the handset includes the price of the music. When you download the music from a music store to the handset you don't have to pay. It feels like free. The innovative part of this model is the role of Nokia. Handset manufacturer Nokia is entering the music industry to sell more mobile phones and deliver more services to their end users.

3. Music tax

Media futurist Gerd Leonhard has written a lot about his 'music as water' music model. According to Leonhard 'music tax' should be paid to a governmental institution for the use of music. An independent party should distribute the collected money to the rightholders. A lot is said about this model. One thing is sure: this model can be a future solution, not a solution for 2008. The various governments and rightsholders are not ready yet to implement this model. ‘Tax’ is not innovative, a music tax is!

4. Levies

This 'music feels like free' model is slightly different from the 'tax' model. Levies could be collected based on Internet access, mp3 players and / or other devices. Levies are collected by public organizations instead of governmental institutions.

5. Brands

Bacardi is using 'music' for marketing purposes. Some artists have record deals with brands like Bacardi.   

6. Piracy

A lot of music is shared via p2p networks. This music is not licensed by copyright- and / or neighboring right holders.

7. Creative Commons

"Creative Commons provides free tools that let authors, scientists, artists, and educators easily mark their creative work with the freedoms they want it to carry. You can use CC to change your copyright terms from "All Rights Reserved" to "Some Rights Reserved."

Creators of musical works can use Creative Commons licenses to show the world if it is allowed to use or remix the musical work and distribute it. Traditionally, copyright societies are taking care of collecting and distributing royalties for the use of music. Creative commons isn’t collecting and distributing any money.

8. Promotions

Sometimes artists are giving away their music for free. To promote their music, to promote their gigs and to let the world know about their amazing music.

The rise of the all-you-can-eat mobile music model

This week Nokia has unveiled the Comes with Music service for the United Kingdom. It launches on the 16th of October 2008. This all-you-can-eat service provides unlimited access to music via your Nokia phone. Sony-Ericsson is offering a similar service: Play now plus. Are this innovative services? Who are profiting from these services? Time to discuss this music model. 

Is this service an innovative music model?

According to Wikipedia 'innovation' means a new way of doing something. But, is this kind of service new? Five months ago the Danish Telco TDC launched a similar music service called 'play'. So, not completely new, but almost. The subscription part of this model isn't new either. eMusic offers a subscription model as well. This model is ad supported and 'feels like free' for consumers. Another subscription model is 'Planet music' a music service of KPN within the Netherlands. Consumers are charged to use this service. So the subscription and ' feels like free' part are not innovative any more. Maybe the 'DRM free' part is a new element? This service is still a walled garden according to blogger David Gerard. Although, this music model is not an innovation, I think you can call it innovative from a rights holder’s perspective. Siliconrepublic.com reports that all the major music labels and major publishers are supporting this service.

Who is profiting from this music model?

This brings me to the next question: Who is profiting from this music model?

• The consumer?
  
• The Telco’s and mobile phone manufacturers? 
  
• The rights holders?
  

They all are profiting! 

• The consumer is finally offered a new music model to consume and discover music, 
  
• The Telco’s and manufacturers are hoping to increase sales of the devices and data transmission
  
• The rights holders are generating new income streams from giant multinationals which are using the content of the rights holders to increase sales by increasing customer (music) experience  
  

But, are consumers really shifting away from P2P networks with this service? Or is this service cannibalizing the sales of other legal music services like iTunes or Beatport? At least it is a nice try and a positive next step for the music industry when it comes to music innovation.