Eliot Van Buskirk reports that one knowledgeable source has estimated that an annual fee of $50 per music lover would allow record labels to remain profitable while allowing unlimited downloads.
At a SXSW panel called “Reinventing Payment Models for Digital Music,” Cambridge-educated economist-turned-music-manager (Pink Floyd, The Clash, Ian Dury And The Blockheads, Billy Bragg) Peter Jenner put a figure on how much each music fan who buys music would have to pay in order for access to every song ever recorded while maintaining or increasing music sales.
He said that $50 per year from every person who listens to music would “meet or exceed the current over the counter sales of the music industry at a far lower cost,” but that because of deeply-entrenched flaws in the outmoded business models used by the labels that have evolved over the years, we’re unlikely ever to see such a system put in place — despite the fact that it would increase profits while allowing people far greater access to music.
While I’d certainly be willing to pony up $4.17 a month for unlimited downloads, there’s one rather obvious flaw in this model: Incentive. Why would record companies spend a lot of money on A&R if they’re getting a fixed cash flow?
