In which a model for a second-hand online music retail business is proposed against all conventional wisdom. Enterprise idea up for grabs – but if you make a real go of it, I think 10% sounds fair, thanks very much…
I’ve been thinking a great deal about the economics of online music of late, and although you can easily buy music – or even lease it in some sort of subscription arrangement – there’s a clear and gaping hole in the digital marketplace: second-hand music.
One of my favourite things to do on a Saturday back in Auckland was to escape to Real Groovy Records on Queen Street and spend hours poring through the second hand discs, prospecting for gold. The records were cheaper than their brand spanking new counterparts, and had a pre-loved feel to them.
There is, as far as I can tell, no second hand market for downloaded music. And I think that’s a shame. Though of course, mp3s wouldn’t carry that same Benjaminian ‘authenticity’ that tangible records have (or have that second-hand vinyl smell I love so much) but there’s a case to be made here.
There must be people who buy tracks on the iTunes Music store, and then later wish they hadn’t – or find themselves short a couple of bob on the weekend and look to their music collection for fat to trim in exchange for a couple of bucks, quid or [insert slang word for local unit of currency here].
What can they do? Common sense dictates that there can be no second hand mp3 market, since digital files don’t operate under a scarcity model. It’s not like physical stock on a shelf that runs out as I sell it. If I give you an mp3 off my hard drive, I’ve still got it. If I charged you for it, I’m pretty sure the record companies would react negatively.
However, logic suggests that a solution must be possible.
Here’s what I suggest: take your used digital music files to the second hand online music shop. I like secondhandmp3s.com as a name (the domain was registered once, but it seems to have expired now) – but some other catchy name will do just fine. We’ll figure that bit out later.
You paid 79p for that track on iTunes and it’s registered to your Apple ID so only you can play it in your computer and the few other places you’ve registered as valid places of listening.
Register with secondhandmp3s.com (or whatever we decide to call the site), enter your Apple ID and password (security guaranteed – honest…) and upload the track to your account. It then goes into the searchable database of tracks available for sale.
You can still listen to it as often as you like, until it gets sold.
A shopper comes along and searches for that song – success! She pays 50p to the site (via Paypal perhaps), of which 40p is credited to your account, and 10p goes toward administration (prices quoted are indicative and may not reflect reality – especially given the fact that this is all imagineware at present).
Change of ownership of the file is registered with the iTunes people automagically (this might take some negotiation at first, but I’m sure they’ll play along eventually – especially if they get some of that 10p) and the song can be played by its new owner on her computer – while the seller’s access to the file instantly evaporates.
So… here’s that transaction again for the sake of clarity:
– Person A goes to 2ndhandmp3s and uploads unwanted file, ‘Song X’
– Person A waits patiently for sale to take place
– Person B searches the site, finds ‘Song X’ and decides to download it
– Person B pays 50p to 2ndhandmp3s
– Person A receives 40p from 2ndhandmp3s
– Person B has rights to ‘Song X’ transferred to her Apple ID account
– Person A has rights to ‘Song X’ removed from his Apple ID account
Alternatively, if Person A wants the money quickly, we’ll pay 30p the moment it’s uploaded, change the rights to a generic holding account, and then take the risk and try and sell it as ‘stock on hand’. Make sense?
I’m sure we could organise a trade system as well. And a bargain bin. And the faint aroma of wee coming from just outside the shop. Perhaps not.
Best of all… the music would sound just as good as it did when it was minty fresh.
Of course, not every tune would end up at the site, so it’d be very unlikely to significantly challenge the full-price new music retailers, who would need to feed the system from the top anyway… but it’d still be a good way to find and sample cheap music and, just like its offline counterparts, it’d be a good place to stop and chat to like-minded crate-diggers.
iTunes, the originating label and the artist have already been paid from the initial full-price sale of that music file. On-selling music need not be any less legitimate online than it is offline.
And of course, it doesn’t have to be iTunes – but as opposed to the concept of Digital Rights Management as I am, a secondhand download store would have to be locked into one of the DRM systems (as used by Napster, Virgin – something like that).
Like I said, if I sold you an ordinary mp3, I’d still have it afterwards. Pretty sure that wouldn’t be kosher.
So… with that in mind, carve yourself a niche online music business and link into the success of iTunes. In fact, I’d be a little surprised if they didn’t end up doing it themselves sooner or later.
Now that I think of it – there’s your business model: set up the site, make it work well – and then sell it to iTunes. Genius.
And I’ll have 10% please.
Links:
Real Groovy Records
iTunes
Napster
Tags: music, business, entrepreneur
Previously: Workmen at Play
