There’s a great Knowledge@Wharton essay that examines “Which Online Music Service Will Have the Longest Playing Time?”

I think the article is pretty much spot on in its analysis of the market and its rather buried assertion that Rhapsody (or at least the streaming model) will be the long term winner.

The article makes one mistake I believe. In discussing consumers’ natural desire to own music instead of subscribing to it, I think the point is missed. I’m pretty sure that the average North American spends more time listening to radio than to CDs. To me this implies that streaming services replace BOTH radio and CD purchases. While most people look at a service like Rhapsody as “Renting CDs” which doesn’t sound that interesting, I think of it as “Having a personal radio station that I control completely”. That does sound interesting. Particular for $10 a month.

The article also makes a small point about value conscious consumers baulking at subscription fees, but I think that the opposite is true. If you only had $10 to spend on music per month, would you buy ten downloads or subscribe to unlimited access to over 400,000 songs?