Monday, May 16, 2005

Inside the Aural Kiosk

Here is something interesting from Yahoo!:

The concept seems great: Place CD-burning kiosks that can manufacture out-of-stock albums in retail stores and offer customized compilations, too. But after numerous false starts, retailers, hardware suppliers and the major labels say a quagmire of issues still threatens to overwhelm the initiative.

Even with the momentum of Starbucks leading the way with Hewlett-Packard kiosks, and despite numerous other hardware suppliers flocking to stake a claim in the market, retailers say that in-store CD manufacturing still has one big problem: an unprofitable business model. Key to the equation are significant hardware costs and stringent content-usage requirements from the majors.

...While all parties agree costs could decline if CD-burning kiosks are mass produced, other expenses still have to be dealt with to achieve a profitable model. As it turns out, each major label is licensing music for kiosks with its own set of strings attached. For example, Universal Music Group wants kiosks to use only special blank CDs sold by General Electric that, depending on who you ask, cost two to five times as much as normal blank CDs. And EMI Music wants the cover art printed on paper to be installed as the front sleeve of the jewelbox. Another major is said to have limitations on when and how much music can be made available for in-store burning.

"Each content company has its own set of rules, which when explained makes sense. But when you put them all together, it's a mess" -- and an expensive one, Mike Dreese says. The CEO of Brighton, Mass.-based Newbury Comics is a member of the CD-burning task force of the National Assn. of Recording Merchandisers.
So major labels can do just about nothing and make money on out-of-print music and they're going to mess it up somehow? Doesn't it seem like they would all just get together in a room and figure this out before it became a problem. I'm sure there are some complexities to this, but this seems really silly to me.

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