Monday, August 31, 2009

The Difference Between Video and Music Business Models

The video business is different from the music business in one significant respect: where people routinely prefer to own their personal collections, they rarely want to "own" news, sports and most serial TV fare. That has some fairly signficant implications for business models. "Buy to own" makes logical sense for consumers of music. "Rent to view" makes more sense for most video and movie fare.

The historic example is the difference between adoption of cable TV and adoption of subscription music services. There are perhaps 20 million XM Sirius subscribers, compared to 63 million cable TV subscribers, plus three million telco video subs and 31 million satellite TV subscribers. In other words, there are 97 million video subscribers, compared to 20 million XM Sirius subscribers.

Most video watchers want to see news, sports and other events only once, movies once or twice. Most music listeners want to own and listen to some favorite songs over and over again. That suggests a stronger market opportunity for video subscriptions, compared to music subscriptions, and a larger market for on-demand video than on-demand music streaming.

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