RatcliffeBlog - Mitch Thinking Out Loud

Can the Stones ignite Rhapsody?

Can the Stones ignite Rhapsody?

Most of the attention to the announcement by RealNetworks that it will provide the first legally downloadable versions of The Rolling Stones' music has been on Mick and the boys. The real meat is the retail placement of Rhapsody at Best Buy, where the Stones' music will be the anchor of a free trial program.

As I see it, it's great that the Stones are going digital, but who the hell cares? They are digital already -- I ripped Exile on Main Street two years ago and play it on my iPod already. I didn't put it on Napster or Gnutella, but, come on, everyone already owns the Stones who is going to buy the Stones. However, if the younger folks, the ones without gray hair who maybe don't have the whole of Mick and Keith ouvre on CD, try out some of the old rockers' music in digital format, Rhapsody might hook a customer. The real question is whether there will be a single format that is secured by all players. We are still a full generation of consolidation away from a standard approach to selling digital music that allows people to purchase digital music from any retailer (Rhapsody, iMusic, etc.) and play it in any registered player. There is still a layer of technology--distribution channel technology--that needs to be stripped out. Records and CDs sold because you could pick up a 45 or an album and it would play on your stereo regardless of where you bought it.

The question is, did RealNetworks pay too much for the short exclusive? As an industry, technology companies have an unnatural compulsion to pay too much for content when they bother to pay for it at all. RealNetworks is generous with content revenue splits, so I hope the free trials pay off or it is going to hurt the bottom line. Assuming a Stones album costs Real $2.50 in royalties, they need to convert one-in-six ($15 per converted customer) to one-in-ten ($25 per customer) trial customers to make this worthwhile.

Now, take a look at Best Buy's site, again. Did you see the Stones promo? At this writing--the day of the announcement--it is below the fold, beneath a no-interest offer and a save-$250 Toshiba offer. We shall see if the Stones have the old magic.