Will SanDisk's New 'Slot Music' Make Sense for Consumers?

Efforts by the major music labels to find new revenue sources that will replace eroding CD sales often have the feeling of things being thrown at the wall to see what sticks. Monday, the Big 4 (Sony BMG (SNE), Universal, Vivendi and Warner Music Group (WMG)) threw a flash memory card with a little help from a hardware maker.

SanDisk (SNDK), the world’s leading supplier of flash memory cards, announced the new initiative to sell the tiny memory chips preloaded with full albums of MP3 music. Plug the card into your MP3 capable phone or portable player and it’s ready to go. It’s almost instantly accessible tunes in the palm of your hand. 

SanDisk has branded the offering “Slot Music.”  Wal-Mart (WMT), Best Buy (BBY) and other major retailers are scheduled to begin selling the experimental products in mid October. 

As announced, 29 albums are scheduled. Each is estimated to price at about $15 per unit. The 1GB micro-SD cards will be packaged pre-loaded with DRM-free music at an iTunes-besting 320kbs bit rate. Extra capacity will be filled with liner notes, cover art and other “special features.” Each will also feature a USB connector/adapter to make the cards accessible through some car stereos and computers.

The advantage and novelty of the new format is convenience and portability for those looking to purchase a physical music product. With an appropriately equipped device, the customer can buy music that’s accessible near instantly.  There’s no download lag or relatively bulky CD to deal with. The postage stamp-sized memory card can be popped into a phone on the way out of the store. 

Today, most MP3 players on the market (Apple’s (AAPL) industry dominating iPods excepted) have these onboard memory card slots. Most music capable cell phones do as well (Apple, again, excepted). 

SanDisk suggests, even without the iPod, the addressable market size is substantial.

The question is, large market sizing notwithstanding, will the cards catch on and stick? Will consumers care or will Slot Music be just another effort from Frankenstein’s musical labs?

It’s a debatable question, to be sure, but at first glance, the near Halloween release date seems impressively appropriate.

The initial music choices appear designed to target a young, often tech savvy audience. These are customers already comfortable, and often regularly interacting with, downloadable content. They don’t appear to be clamoring for a new music format or a “physical” music product, let alone one that is tiny and, potentially, easily lost.  

The same audience has also shown a tendency to favor buying singles over albums (evidenced in no small part by iTunes success).  Will they buy a $15 memory card if all they want is that one, readily available 99cent hit?

Slot Music looks interesting. it’s creative…its clever. It makes sense for SanDisk (which specializes in selling memory cards) and it makes sense for the record labels which favor selling albums over singles. But for consumers?

To succeed, beyond a gimmicky, novelty product that appeals to just a few, Slot Music needs to reach a wide audience and offer value above and beyond existing competitive products. It’s not clear that it does or can.

Comments

[FreeRange:]

Suggestion to music industry: Put out great music on all tracks. Have your bands actually know how to play music. Develop schools for them to start with classical training in music across all genres including jazz, blues, classical. Then help them write great songs. Consumers have voted - for the majority of bands / albums they are no longer willing to pay you to buy full albums of mediocre songs to get one or two good tracks. Its a combination of quality and consumer demand. What is it you are trying to do? Heck, why not put one hundred tracks on an album and charge $150. Do you think that might work? Slot Music will fail horribly... as it should. Digital distribution is the most efficient method for delivering content, and the most profitable. (The industry is just trying to get people to buy more at one time.) You just need to deliver what people actually want to pay for - what a concept!

2008 Sep 23 08:14 AM

[chano:]

Well said FreeRange. This product will only enjoy marginal sales and then only if the songs are freely copyable and the 1Gig card then becomes a reusable item. Even so, the thought of having to buy unimpressive filer songs is a killer. Digital distribution means content with no distribution medium. This is a backward step therefore.
But it does indicate some lateral thinking on Sandisk's part. They are going to need a lot more of that to regain their lost market cap.

2008 Sep 23 02:18 PM

[bayamos:]

This is all about keeping the distribution bottleneck which gives the Labels their power. With electronic distribution, sooner or later the labels will die because bands will have other forms of distribution.

They know CD's are going the way of the Dodo. It's a last-gasp effort to keep the retail market monopoly.

2008 Sep 24 02:04 PM

[User 270845:]

What I don't get is how come people today can't actually take time to listen to an entire album of music from an artist and appreciate it for what it is instead of only wanting to hear the "hit". Most albums have many great songs on them that so many people never hear because they don't take the time to listen. It's the short attention span, immediate gratification syndrome. Just sit back, and LISTEN. I guess those people can't sit in an open field and just enjoy the breeze either. So much greatness in this world being missed by so many.
As for the format, I predicted a few years ago that music would eventually come on a chip instead of a spinning disk. I think that the market as it is today will not support it because of the availability of downloads, but it is a great idea and the devices we are using are already equipped to use it.

2008 Sep 26 04:19 PM

[mountain_racer:]

Well, @chano "This product will only enjoy marginal sales and then only if the songs are freely copyable and the 1Gig card then becomes a reusable item." The answer to both of these is yes, DRM free and the card is a standard 1gb microSD card, fully reusable.

I'm with User 270845, some of my favorite music is the stuff the record labels never promoted, the b sides of 45's and singles. I like more songs from the Beatles that were NEVER hits than those that were. The crap most people listen to on the radio is just what the record companies want you to hear! The GOOD stuff is usually the rest of the album. We all get tired of the overplayed singles we hear over and over and over on the radio. Not buying the whole album means you miss out on finding the hidden gems, period. But go ahead and keep buying one song at a time from iTunes and load them onto your iPod (which you can't use these card in anyway)......By the way, the current cost of a 1gb card with no music on it from the largest brick and mortar electronics retail in the USA (rhymes with west and eye), is....wait......only $15.99 USD. So you get a whole bunch of music, that you just might be surprised to like, for a buck or two more than you would pay for a brand new empty card.

2008 Oct 02 12:34 PM

[the_supah:]

so, in the off chance that i'm going to be buying a "1GB" card, then this would do it... but, who really buys that small nowadays ?

2008 Dec 09 03:53 PM

[221DESIGNS:]

Pure business retardation. Hi five for sandisk because I think they're the only ones going to profit from this idea. The distribution and accessability isn't the problem here. If it was you would see full digital album sales soar along with the $.99 cent singles. The problem is these two things here. 1.) Artist need to stop making so much mediocre music and album filler 2.) Know that there are people who simply will not pay for something they can get for free (bootlegging) The sad thing is I can only imagine that production and overall cost for these "slot cards" is way less than CD's (considering. Costs for discs, cases, printed material & inserts, weight for shiping etc.) The only thing your doing is increasing the profit margins on the sales your currently getting. Your not going to increase sales from this at all. The price on those Slot card records I just seen on Bestbuy.com are the same as CD's. The real answer is lower the price on albums. Now that digital singles cost $.99 you give the option to buy only what you like and not the artist entire project. Pricing on albums should be set so it entices me buy the whole thing versus paying $1 for just one song as to where I can get an entire project for $10-$12. i'm only 23 not to say I'm extra old but i remember buying singles for $2-$4. Why pay that when I can get the whole CD for $12 on sale.So the question in the end to answer is "Does the music industry REALLY want to increase record sales?"

Cnote - A die had music fan

2008 Dec 18 07:28 PM

[Eppelsauce:]

I bought a slot music player for my wife christmas along with 2 albums. She loves it and I have to say it is a great way to get new music. It comes with a usb adapter so you can plug it into your computer and listen to the music. You can Download other tracks to the disc, so it's more than just the 1 album. You can burn a cd with it and it comes with a jewel case size booklet with cover art. Even my dvd player has a usb input that I can just plug it in and play the music. I hope it takes off, they are very small discs and could be very easy to lose, but cds scratch easy and are bulky to carry around. The player was only $20 at Walmarts and the discs I bought were only 13.98 each. About the same price as a cd, but you get so much more. It's too bad people only download a few songs here and there off an album, Some albums work as a whole better than a few tracks.

2008 Dec 31 01:37 PM

[speedy29:]

This product is for people who do not want or like to download. Market towards 40 & up and the music they like and it will sell. I know, I think this is a great idea!! Over 50 and loving it!

Jan 10 05:26 PM

[Cinderella:]

I recently stumbled across the Slot music and Slot music players at Walmart and was intrigued with the idea of being able to have a full album on a small chip but also the space to put some of my own downloaded music on it..I added over 100 songs with space left over. My kids (26 & 22) both liked the concept so I bought each of them a player and a chip for Valentine's Day and they love them as much as I do. The player doesnt have a display but who really needs it..I own 3 mp3 players and I use the slot music alot more than I use any of the mp3 players, the slot doesnt require charging since it operates on 1 AAA battery and there's no freezing. The only problem I see for the slot music is 2 things..(1 No advertising to let consumers know about slot music and (2 close minded people who won't even consider trying it or who are only interested in hearing the "radio hit"..what a shame,, they don't know what they'll be missing. It's a small player and a small micro chip with big sound and even bigger possibilities!

Feb 22 02:36 AM

[User 403702:]

I agree with a lot of the comments, but I'll never buy these. I, too, have been expecting a distribution medium like this for a long time, but I didn't expect that it would contain compressed files. If I have to go to a store for a product or order it online, I want the full file (i.e. CD quality) or at least a lossless AAC or something. There's enough room on a 1G chip. I know, many of you will say nobody can tell the difference between a CD and 320 Kbs file. Hogwash. One of my ears is shot, and I can tell. MP3 is one of the oldest formats, too. Go to any audiophile group, and you will see that they cannot even stand CDs. I think that kids will still download their lousy lossy files anyway. I kind of looked forward to this medium giving me CD quality files on a chip. If this keeps up, then all we'll be getting period are lousy compressed files. They may sound OK on earbuds, and 320 isn't the worst in the world, but I wish somebody would allow me to download or purchase the CD quality files.

Apr 28 02:06 PM

[Mark Arnold:]

Put The Beatles on this and I'll buy them....

Aug 03 05:40 PM