Digital Download Cards Dead On Arrival

by Marc Lostracco

Asleep at the switch during the dawn of Napster and viciously retaliatory in the years that followed, the music industry hasn't done itself any favours over the last decade. In an effort to maintain a business model that is no longer relevant, the "Big Four" music behemoths have attempted a slew of marketing tactics, from added-value multimedia discs, to movie tie-ins, to bundling and boxing product into "premium" offerings. This week, Toronto-based Sony BMG Canada is rolling out the Platinum MusicPass—basically, gift cards for full-length albums. It's a sign that the company is waking up to the digital downloading reality, yet still can't reconcile its shareholders with how customers want to enjoy their music.

In a startling about-face this summer, EMI was the first major label to offer online music free of crippling Digital Rights Management (DRM). For the first time, EMI tracks purchased on iTunes could be played on devices other than the iPod, and music purchased on Amazon needn't be tied to Windows Media-enabled software. Historically resistant to anything that wasn't Krazy Glued to brick-and-mortar retail or their own abysmal online service, Sony BMG was the most stringent holdout. The MusicPass cards will furnish high-quality (320 kbps) MP3 files free of DRM, but you have to buy the full album at retail to get it—plus, the pickings are currently pretty slim, at only 23 titles.

It seems like Sony BMG Canada, acting on a directive from the mothership, is targeting the type of older customer (read: 35+) who may not typically download music, and who is used to the concept of buying a full album rather than the more current à la carte, per-song method. Priced at $12.99 and featuring safe, middle-of-the-road artists like John Mayer, Celine Dion, and Bruce Springsteen, the cards will be placed in the impulse-buy zone near the cash registers of Future Shop, Shoppers Drug Mart, CD Plus, Best Buy, and Wal-Mart.

For customers just dipping their toes into the digital music domain, DRM can be a deal-breaking turnoff. Perhaps they've received an Zune as a gift, for example, and hit up iTunes for the Ultimate Santana only to find that they can't play it on their portable device. These customers also tend to be less likely to head into an HMV to buy a CD, but are intimately familiar with every aisle at Wal-Mart. And all customers, regardless of age or technical knowhow, want to be able to buy music and play it on the devices they own.

Gift cards for Shoppers, Future Shop, and the like already exist that allow for more customer choice, so why would someone choose a Carrie Underwood MusicPass over an iTunes gift card? "They have great graphics and a quality look and feel that will make them highly collectible," says Brooks Smith, the CEO of InComm (the company manufacturing the MusicPass cards). Uh huh.

Physical CD sales have been in a free fall while legal music downloads grew by 40% in 2007, but Sony BMG says that many customers still want a physical product as part of their music purchase. The cards are redeemed by scratching the back to reveal a PIN and serial number, and then visiting the MusicPass website to download the music and bonus material. Apparently, once the card is redeemed, the label hopes that people will be scrapbooking them. Or trading them. Or something.

Despite the marketing push behind MusicPass, it's likely a niche product for occasional music buyers and last-minute gift hunters. While it's a good thing that the cards allow for interoperability without the irritations of DRM, consumers still must buy the entire album, which is really what the music companies want anyway (Sony BMG now sells DRM-free individual tracks on Amazon). Six themed compilation cards are also being offered, which allows the label to access its lucrative publishing catalogue.

Unfortunately for the music industry, the aging boomer isn't too relevant as a music consumer, and the slow burning, career-artist development of the Billy Joel era is an exception to the norm these days. A mass-produced, flimsy plastic card is hardly a collector's item (certainly less-so than the actual CD), and it creates an undesirable extra step for the customer. MusicPass is also a single-label product only, so expect a slew of confusing commodities from competing companies. And finally, MusicPass costs about $3 more for the exact same product that is more easily obtained on iTunes. Sony BMG got it right by uncrippling the tracks, but that's about it. Otherwise, this idea should go over like, er, a lead zeppelin.