Tuesday, December 11, 2007

The Cat is out of the Bag

The music business appears to be switching its business model so fast that it is in danger of really screwing itself. Imeem has now finalized a licensing deal with Universal allow it to position Universal songs and videos for free, on-demand, and interactive streaming.

Imeem has also completed licensing agreements with Warner, Sony BMG, EMI Music. Imeem is now using the catalogues to power an ad-supported business model that shares revenue percentages. Although it is a fresh revenue source for the record companies today it is not a substantial earner.

According to research group eMarketer, networking-based revenues will move from $900 million this year to over $2.5 billion in 2011.

The issue is not whether the model will work but how many will succeed and whether by introducing this the cat is effectively well and truly out the bag and never going back in. Imagine you stream all you want for free and then save the files and repackage them why would you ever buy anything again? The softweare to capture, convert and do this is here and available to today and sitting on a laptop near me. The risk is not that it succeed but that it doesn’t match expectations.