Labels criticise unlimited downloads business models

It looks like Virgin Media may struggle to launch the unlimited MP3 downloads tier of its upcoming MusicFish service, judging by comments made by labels during a panel session at MidemNet today.

Stephan Bryan from Warner Music Group outlined his label’s objections to unlimited download services, saying they don’t “address the broad consumer base that we need to go after” and that such offers “may be appealing to voracious music consumers”, thus cannibalising sales of recorded music to the keenest music buyers.

Meanwhile, Michael Paull from Sony Music Entertainment said the industry should focus on “solving what the consumer needs, rather than come up with a model they’re not asking for”.

Even Simon Wheeler of Beggars Group – who thinks that more unlimited download offerings will launch in the future – described “a huge amount of concerns around getting to an unlimited model”, particularly for indie labels like Beggars, who rely on their keenest customers to a greater extent.

“They’re pretty turned onto technology: they are going to be some of the first ones to buy into these services,” he said. “So you take all our £500 to £1,000-a-year customers and turn them into £100-a-year customers.” Wheeler suggested that the industry needs a controlled trial of unlimited downloads to get more data on customer behaviour.