Subsidizing Public Music Purchases: Freegal and Libraries

According to BusinessWire on Forbes.com, Library Ideas, LLC, “a new media company focused on Public Libraries,” announced in early May that it would “provide its network of Public Library websites in the United States with access to songs” from Sony Music Entertainment’s catalog.¹   This music service, entitled Freegal, enables patrons—using their library card IDs—to download music for free from their library’s website.

In a Library Journal article, Norman Oder explains that “libraries must pre-pay for a minimum number of downloads from Freegal, and each library user will be limited to, at most, 20 downloads per week. Libraries that see a spike in use can limit the number of system-wide downloads in a week or month to ensure wider access, and library card holders can also reserve downloads.”²  In an effort to allow files to work across multiple platforms, Freegal boasts no Digital Rights Management (DRM) policies and delivers content as MP3 files.

While initially Freegal may seem like a worthwhile venture, the service does have its drawbacks:

• Freegal charges libraries per download and requires libraries to pre-pay for a minimum amount of downloads, thus subsidizing libraries’ music and eliminating any sort of permanent collection.
• Over time and especially for popular artists, libraries will end up paying significantly more for Freegal downloads than the initial cost of buying albums on CD.  Additionally, libraries own the content they purchase on CD and can house that content within their collections.  There’s nothing to own with Freegal.
• Because the service simply uses libraries’ websites as interfaces for content download and not content collection or hosting, Freegal forces libraries to become the middleman in what should be their own system—and music collection. 
• Freegal leaves it up to the libraries to determine any sort of rights management.  Therefore, if libraries aren’t savvy about their patron downloads, they could essentially give music away for permanent storage and use on their patrons’ hard drives.  Thus, libraries become mechanisms for free music rather than public sources for lending.

Earlier this year, we posted a blog story on CD albums sales vs. digital album sales based on data culled from Nielsen SoundScan; (check out our blog story Did You Know?  In 2009, Compact Discs accounted for 78.9% of all albums sold).  We noted that CDs accounted for 78.9% of all albums sold, while digital albums only made up 20.4% of sales in 2009, meaning that, by and large, patrons still prefer CDs.  Additionally, we discussed how CD audio tracks are better in quality compared to MP3 and AAC downloads.  This blog discussion from February only amplifies the details elucidated above about Freegal.

While there’s no denying that digital music might be the way of the future, one must wonder: Is Freegal a sustainable service for libraries to consider?  With Freegal, instead of paying for a product once and circulating it 1000 times, the library must regulate downloads and renew monetary commitments when the pre-pay runs out.  Essentially, Freegal forces libraries to subsidize their patrons' music collections.   

What are your thoughts on pay-per-download services like Freegal and digital content?  What issues have you or patrons encountered with DRM and usability?  Post your views here as comments.

¹Public Libraries to Offer Downloadable Music from Their Websites

²PLA 2010 Conference: DRM-Free Downloadable (Sony) Music at the Library

Did You Know?

In 2009, Compact Discs accounted for 78.9% of all albums sold.
While media outlets focus primarily on the closing gap between physical album and digital music sales in terms of Overall Industry Revenue, the reality is that CDs remain the dominant product in the music industry. Check out the following information culled from data collected by Nielsen SoundScan, “an information system that tracks sales of music and music video products throughout the United States and Canada” and distributed to Universal Music¹.

Key Industry Year-End Data for 2009

• CDs accounted for 78.9% of all albums sold, while digital albums only made up 20.4% of sales.
• Taylor Swift sold 5.4 million albums in 2009 with 89% of those albums being physical CDs and only 11% being digital.
• Susan Boyle sold 3.2 million albums in 2009 with 97% of those albums being physical CDs and only 3% being digital.
• Top 10 album sales for CDs was up 14.3% over 2008, meaning consumers are buying CDs and more of them.

Revenue in the digital avenue is track-driven, meaning consumers purchase and download single tracks for their music library. However, when it comes to obtaining entire albums, consumers are significantly more likely to purchase physical music albums in the form of CDs than download an entire album.

So what is it about CDs?
Why are consumers—and therefore your patrons—continuing to turn to CD albums over digital music albums?

• CDs often provide lyrics, graphics, and supplemental content that digital tracks do not.
• CDs cannot be lost in common hard drive crashes or data dumps like digital tracks.
• They also serve as an invaluable backup for those who import their CDs into their computer music libraries.
• While most cars nowadays have CD players, a smaller amount offer outlets for digital music players.
• CDs on average cost less than downloading entire albums. 
• For example, The New York Times reported in April of 2009 that the average cost of a music track download was increasing from $.99 to $1.29, which would therefore inflate the cost per album from an average of $9.99 to $13.99².
• Additionally, in a recent post on betanews.com, Joe Wilcox criticized the rising cost of downloads on iTunes, stating “recently, iTunes pricing has gotten wicked crazy…I got to taste the insanity early this afternoon, when finding a new album selling for about 8 bucks more for the iTunes digital download than the CD…”³.
• Finally, digital music consists of compressed, encoded files. CDs feature uncompressed music at the highest quality. As Joe Wilcox explains:
  
  

  Apple isn't just charging more, it's doing so for a comparatively inferior product. Music fans can argue the merits of AmazonMP3's 256kbps MP3 encoding compared to Apple's 256kbps AAC. But there's no argument about lossless, uncompressed Compact Disc Digital Audio format and its 1,411kbps bitrate³.

So what does all this mean for you, the librarian?
While there’s no denying that digital music might be the way of the future, as proven above, there’s still quite a bit of shelf-life on physical product, especially music albums on CD. Midwest Tape Vice President Jeff Jankowski agrees completely, explaining that “libraries have a virtual monopoly as the only outlets that loan CDs and should protect this competitive advantage by maintaining quality collections.”

¹http://home.soundscan.com/about.html
²http://bits.blogs.nytimes.com/2009/04/07/making-sense-of-apples-itunes-new-prices/
³http://www.betanews.com/joewilcox/article/iTunes-pricing-is-out-of-control/1263326789