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May 16, 2005
How Much Profit Is In Downloadable Music?
Cringely's column looks at inflection points, including Microsoft's new game box (which is, predictably, a home digital media center), the Google Accelerator (which is going to push all sorts of buttons around fair use and restricting access - I may try to do a Big Think about that later), and finally he gets back to what he thinks Apple's plans are.
Along the way he lays out his view of the strategy for Yahoo's Music Service, pointing out that their USD7 pricepoint is probably the zero-margin point. This means that the subscription services that are charging more are probably pocketing that extra $7-8/month as profit. Not bad on a per-customer basis; too bad there are so few customers.
Cringely notes that this a Yahoo! trying to displace the per-song pricing model that has made Apple dominant. However, Cringely seems to agree with me that the major market (for both music and movies) is and will remain in the download-and-play arena, not streaming.
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