Yahoo! Music’s Dave Goldberg: “Downloads, as a business model for digital music, has failed”

Authored by Scott Goldberg on October 4, 2006 - 9:56am.

From Digital Music Forum West 2006: Dave Goldberg, VP & GM of Yahoo! Music, incited unanimous disagreement from his fellow panelists for the statement, but he explained his point: “When you look at people who are buying downloads,” he said, “it is two kinds of people: Older people who have money and time, and people who are doing it through gift cards.”

The topic turned to the question of why younger generation users aren’t, in his opinion, buying downloads, and he responded, “We can’t figure out a way for kids to easily pay for downloads. It’s easy to get this stuff illegally, and really difficult to get it the way we want them to.”

Mr. Goldberg does believe that subscription-based downloading will be a viable business, but when pressed on Yahoo’s strategy he said, “We have a lot more work to do in educating people on subscriptions, and it’s the kind of thing that doesn’t happen overnight.”

A problem all of the panelists agreed on is the lack of interoperability among music downloading services, the main culprit being, of course, Apple and its iTunes store. Everyone believes the lack of interoperability benefits no one, especially the customer. Laura Goldberg, a panelist and COO of Napster, believes it will take a competitor to put enough pressure on Apple to begin exploring interoperability, but Amanda Marks, EVP of Universal Music’s eLabs, was not optimistic. “I doubt,” she said, “that within a year iTunes will have agreed to interoperate.” The success of Microsoft’s Zune may help determine that timeline, if it occurs at all, though Zune will have the same strategy as Apple.