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Digital Music Finds Some Locker Room

May 30, 2006

SAN FRANCISCO — The digital music battle of the future may not be over where music is purchased, but where and how it is stored.

A number of companies have created online content “lockers” where users can upload their digital media files for storage that they can subsequently access from multiple devices.

Examples include Oboe, created by MP3Tunes founder Michael Robertson, and MediaMax, from Streamload. Oboe offers unlimited storage of music-only files for a flat fee of $40 per year, while MediaMax will store 25 GB worth of music, video and photos for free, with up to 1,000 gigabytes for $30 per month.

While initially enticing as a media backup option, both services offer added accessibility intended to boost the value of music to users.

“The idea is to take the paradigm that’s been built offline in the iTunes, Rhapsody and Napster applications and move it onto the Web,” says Michael Corrales, VP of marketing for Streamload.

For instance, music stored in either company’s lockers can be streamed remotely from any computer with an Internet browser. Oboe even works via an Internet-connected TiVo digital video recorder.

“It’s safer, more versatile and more flexible,” Robertson says. “Right now, everybody’s focused on the iPod. But that’s like carrying around a pocketful of nickels because you want money anywhere you go instead of a credit card.”

COMPLICATING FACTORS

Like anything else in the digital music industry, the concept isn’t quite as simple as those trying to sell it might like. Music wrapped in certain types of digital rights management (DRM) technology — such as Apple’s Fairplay — can’t be streamed from these lockers. Neither can tethered downloads acquired from subscription music services like Napster or Rhapsody.

Yet another digital locker company, Navio, is circumventing this with a different approach. Instead of marketing to consumers, Navio partners with content owners — including Sony BMG, TVT Records, Fox Sports and the Walt Disney Group — to create online sales portals. Consumers buying music through these outlets can download their purchases in new formats as they need to. If someone switches from an iPod to a Creative Zen Micro, they can get a new version of the still-copy-protected song without having to repurchase it. The service is like buying the rights to a file rather than the file itself.

“If we can give you the right to have your music in whatever format you want, that’s just a far better value proposition,” Navio COO Ray Schaaf says. “How many people are going to buy the same thing four or five times?”

In the wireless world, content aggregator Oasys Mobile has done something similar. Customers who buy ringtones, wallpaper images or mobile games from the company can store all their content in a virtual locker and redownload it at no cost when they upgrade or replace their phones.

While this “buy once, use anywhere, on anything” concept is the ultimate value to content lockers, consumer excitement over such capability remains relatively low. Both Oboe and Streamload claim only 25,000 paid subscribers each, while Navio went live with its service only recently (May 22).

Today the computer remains the de facto content locker. But things may get more interesting as more and higher-speed Internet-enabled devices hit the market, from PDAs and car stereos to home entertainment systems and mobile phones. Suddenly, the computer and the MP3 player no longer are the keystones of the mobile-music experience, and there is less need to worry about transferring compatible files from device to device. Each connects directly to the content locker to play or download music.

These new devices could have a positive effect on digital music sales. According to a November 2005 Forrester Research survey, 38 percent of consumers surveyed said they expect to have the ability to transfer that content to any device they own.

“In the next six to 12 months, you’re going to see a couple of dozen devices that will just have all your music when you turn them on,” Robertson says. “When that happens, that will unlock the floodgates for consumer demand for the locker.”




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