Real Networks president Rob Glaser stated in a recent interview, "Most users that are filling their iPods are still doing it through piracy."
This is the same line that the music industry uses. I have never understood the marketing value of claiming that all your existing and future customers are crooks. And these companies usually go farther and whine that these crook customers "...just don't get it." Where "get it" means they won't buy their stuff.
What has been happening to the music world for the past two years seems quite clear to me. Customers are voting with their pocketbooks, and what that "vote" says is that there is a clear preference for owning music as opposed to renting it month by month.
Glaser, in the interview, talks at length about what good deal renting music is, but his examples are trumped up and compare apples to oranges. It does not take a rocket scientist to figure out that you can buy a song for ninety-nine cents from iTunes or spend $15 for a CD and play it for the rest of your natural life without ever spending another nickle.
On the other hand, renting by the month is an extraordinarily bad deal.
Let's suppose I want to start a record collection of the equivalent of 100 CDs, or about 1000 songs. The lifetime cost (say forty years of listening pleasure) of buying the music is $1000. The lifetime cost of renting the same 100 CDs is $7,200. And you can't give the music/CDs to someone else when you pass on. So you spend $7,200 and have no equity. Zip, zero, nada. If you spend $1,500, you own 1,000 songs.
This is not hard to figure out. Real's deceptive pitch centers in part around the fiction of "unlimited access" to music, with a lot of happy talk about the wide variety of music you can listen to.
But the fiction here is that we all tend to have very specific tastes. I don't care how much rap music Real offers for rent--I'm not going to be listening to it, ever.
The market is speaking, and what it is saying is that we want to own our music and media. A similar fight is going on with movies. The studios and music industry want to discard the ownership model completely and make all media be based on a rental model. Bizarrely, many in Congress agree. Right now, many of our elected representatives are trying to make it illegal to tape or record anything, and proposed legislation would require consumer electronics manufacturers to build in expensive circuits that would make it difficult to tape anything--from a TV, from a radio, from any kind of media player (e.g. CD, DVD, tape, etc.).
Supposedly all this is necessary to keep the music and movie industries from going out of business from all those bad "pirates." Meanwhile, Apple has sold (as in, people PAID for) a billion songs, more or less. If we are all pirates, who is buying all that music?