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A few Slacker thoughts

Slacker_logo2_2 Maybe I'm beating a dead horse, but I wrote another piece about how digital rights management technology can be used to give consumers more, not less, than they had before. It's today's Opinion Daily column at latimes.com, and you can read it here. The example I cite is a company called Slacker, which re-imagines radio for the always-on generation. I haven't had the chance to play with Slacker's service yet -- I spent the last week at South by Southwest, seeing more bands in four days than I'd seen in the previous decade (read three versions of the highlights: here, courtesy of my pal Bill Goodykoontz; here, from my pal Dan Hontz; or here, from me) -- but the demos that CEO Dennis Mudd provided at the festival were pretty compelling. At any rate, the main thing that interested me was how the company used DRM to create a new value proposition, not the product itself.

The Slacker team includes alumni from several pioneering digital-music companies, including MusicMatch (Mudd's last company, which made one of the first jukebox programs for PCs) Rio (the first MP3 player) and XM satellite radio. And as an aside, Slacker's launch could have two impacts on XM. First, it shows how much technology has changed the radio market since the FCC set the rules for satellite radio in 1997, giving regulators another reason to approve the proposed XM and Sirius merger. Contrary to what critics say, the combination hardly creates a monopoly; as Slacker's emergence shows, the radio market is getting more competitive every day. Second, the license deals that Slacker negotiated include the ability to offer a portable player that lets users save tracks they hear on Slacker's radio stations. Those tracks can be then be played on-demand and mixed with the user's personal MP3s, but not moved off the device. That's just what XM does with its Inno, a player so loathed by the major record companies that they sued over it. That case is still pending. So why is Slacker's player acceptable to the majors (two of the four have announced deals with Slacker, and the others are expected to follow) and the Inno isn't? My guess is that it was easier for Slacker, as a start-up with no users, to carve out a new royalty niche -- somewhere between the rate for basic webcasting and the one for a fully on-demand, portable service such as Napster-to-go -- than it has been for XM, which has millions of users. The fact that Slacker (and Sirius) were able to strike deals, though, suggests that XM will ultimately be able to do the same and make the labels' lawsuit go away.


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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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