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

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by: Seth Gilbert

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 (NYSE:SNE), Universal, Vivendi and Warner Music Group (NYSE: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 (NYSE:WMT), Best Buy (NYSE: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 (NASDAQ: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.