While the media is busy spinning the new Yahoo music store with respect to its competition (iTunes, Rhapsody, Napster), few are focusing on the most serious competitive factor in all this: unauthorized file sharing. (Indeed, the stores themselves barely view each other as competition). Broadband Reports refers to file sharing as the pink elephant in the room, wisely noting that Yahoo's entry will make little difference in file sharing habits. More to the point, the Yahoo service doesn't address the main problem with online music ventures: it's a flawed and failing business model. It doesn't give people what they really want, i.e., flexible access to lots and lots of music. People will always find a way to do that, as they have for many years, typically through some sort of sharing. As Mike Langberg points out, the online stores are losing out to P2P sharing because, despite offering over a million songs, the stores offer only a small fraction of all the music they could sell -- nearly all of which is available on file sharing systems. The converse of this thought is that the labels can reduce file sharing by making many more songs available online than there are today. In the past, he's suggested making download services more attractive with cheaper prices and better song previews. These ideas are all well and good, but are still somewhat short-sighted. If the labels are smart, they'll consider a new business model, perhaps one that involves giving away the songs and selling more lucrative products and services along with them. And we won't even sue them over the business model patent if they use it.
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