Journal D.A. Zollinger's Journal: Win Win proposition
After reading today's article about "When Would You Accept DRM?", and reading some of the comments, one stood out in my mind.
While I am sure the poster wrote the comment in jest, he does have a good idea, if applied differently should benefit all parties involved. Why not put a deposit on music you are borrowing? Let me explain: You visit a site, and register to use their music "borrowing" service. For every song you want to "borrow" you pay a set deposit fee (say 0.99, or since we know we are borrowing, 0.50). For as long as you are a subscriber to the service (with a nominal overhead, service, or administrative fee - say $1 per month) you can continue to listen to your music as much as you want, as long as you use the music as intended. Once you cancel the service, the music stops working - a la Napster - but the service refunds your music deposit of .99 or .50.
With this business model, while you have limited access to their music, they have limited access to your money. While .50 may not be much, if you have over 1 billion songs being borrowed, that is 500 million in funds that the company can invest and get a return on while they are in posession of your money. The company earns its money from investing your money while they are in posession of it. The administrative fee covers e-mailing or snail mailing account information to you, as well as sending you a final cheque or debiting your account when you leave the service. You gain access to songs that you want to listen to at a small fee.
What about the artists? They have the option of taking a cut of the borrowing fee when it is paid by the listener, or they can claim partial ownership of the fee as it is invested, much like taking part in a mutual fund, and they can either cash out at anytime less an administrative fee, or they can get a percentage of the fund when the listener returns the song.
Lets put this all in perspective. Lets say I want to borrow song X by artist Y. I pay the company $0.50 to download song X with all of the DRM included. Lets take several scenarios with the artist. If the artist has a contract with the company that asks for his funds to be taken out right away (lets be generous and give the artists 10%) he would get $0.05 immediately. The company invests the money while I am listening to my borrowed song. Lets say I listen to it for 3 years before I decide to return it. Lets say that in the 3 years while I was listening to the music, the company invested my money and tripled it. They pay me my $0.50 back, give the artist his cut of $0.15, and they keep the remaining $0.85.
That is how the system would work, but in real life, it would look more like this: 40,000 people pay $20,000 to download 40,000 songs this month. The company invests that $20,000 into its own aggressive growth fund that may be worth millions of dollars. Lets say that during that same month, 1000 people quit the service or "return" their songs. The company withdraws $500 from its own fund, and pays back listeners their deposit. Making calculations on growth from the time those listeners borrowed the music until now, the company withdraws a set amount of money per rental/per artist, and seperate the funds out into accounts for those artists, and send cheques to those artists. The fund continues to grow, and is only touched to pay salaries (this whole process can easily be totally automated) and pay out fees to artists and listeners.
Wow, thats not half bad. Time to write another business plan!
While I am sure the poster wrote the comment in jest, he does have a good idea, if applied differently should benefit all parties involved. Why not put a deposit on music you are borrowing? Let me explain: You visit a site, and register to use their music "borrowing" service. For every song you want to "borrow" you pay a set deposit fee (say 0.99, or since we know we are borrowing, 0.50). For as long as you are a subscriber to the service (with a nominal overhead, service, or administrative fee - say $1 per month) you can continue to listen to your music as much as you want, as long as you use the music as intended. Once you cancel the service, the music stops working - a la Napster - but the service refunds your music deposit of
With this business model, while you have limited access to their music, they have limited access to your money. While
What about the artists? They have the option of taking a cut of the borrowing fee when it is paid by the listener, or they can claim partial ownership of the fee as it is invested, much like taking part in a mutual fund, and they can either cash out at anytime less an administrative fee, or they can get a percentage of the fund when the listener returns the song.
Lets put this all in perspective. Lets say I want to borrow song X by artist Y. I pay the company $0.50 to download song X with all of the DRM included. Lets take several scenarios with the artist. If the artist has a contract with the company that asks for his funds to be taken out right away (lets be generous and give the artists 10%) he would get $0.05 immediately. The company invests the money while I am listening to my borrowed song. Lets say I listen to it for 3 years before I decide to return it. Lets say that in the 3 years while I was listening to the music, the company invested my money and tripled it. They pay me my $0.50 back, give the artist his cut of $0.15, and they keep the remaining $0.85.
That is how the system would work, but in real life, it would look more like this: 40,000 people pay $20,000 to download 40,000 songs this month. The company invests that $20,000 into its own aggressive growth fund that may be worth millions of dollars. Lets say that during that same month, 1000 people quit the service or "return" their songs. The company withdraws $500 from its own fund, and pays back listeners their deposit. Making calculations on growth from the time those listeners borrowed the music until now, the company withdraws a set amount of money per rental/per artist, and seperate the funds out into accounts for those artists, and send cheques to those artists. The fund continues to grow, and is only touched to pay salaries (this whole process can easily be totally automated) and pay out fees to artists and listeners.
Wow, thats not half bad. Time to write another business plan!