Its great you write a piece about argentinian music industry, there are a few more reasons why people don’t buy music online:

1. The biggest attempt for an online music store uses Microsoft’s WMA files, which dont play at most available music players (except ones from Phillips).

a.They sell music for 2.80-3.50 pesos, which is only 1 peso less than pirated cd’s from the same artists. 15 songs cost $45, while a legal cd costs $20 – $30.

Why do they charge that much?

Its not because of SADAIC (the association that charges for commercial usage of musical work), which charges 10% or a minimum 10 cents of the total cost (which would be $0.35 for them), which actually goes to the artist un a 90% (if the artist is associated correctly, which might mean some paperwork)

I don’t know how much they pay to the owner of the music. I don’t believe is more than 50-70 cents per song.

Credit cards get most of the money there, typically charging $1 to $1,50 for a transaction, plus some porcentage between 3% and 5%, and then there’s payment gateway costs, wich is somewhere around $0,30 per transaction.

So here is where much of the actual cost of online music will go with per song credit card payment, almost 2 pesos. Now the total $2.80 – $3.50 is easily explained.

How can we solve this? I am not sure, there has been a few attempts to do it, but nothing has catched. This site i was explaining sells $10-$28 cards in music stores so people can buy the songs… i haven’t seen anyone i know ever buy one.

Mobile and Land Phone companies have a chance there, they could charge some money when you call some number, that associates with your account somehow, but they’re not opening that payment method to small business, so there’s no chance a regular folk can do it, it probably has same or more costs than credit cards, cause no one has tried it yet.

The buenos aires subway company has a “digital purse” which i believe could do the trick, if they only had an online payment gateway. People already use this cards to move faster on the subway and they already have some money in there *tip tip*.

Then theres all the big companies which have services like ISP’s, Newspaper and magazines subscriptions, etc.. which could charge all charges in they’r monthly bill, but i’m guessing its not business for them yet, or maybe they don’t have much imagination, maybe it involves lots of paperwork or some legal status, also it’s not they’re usual business…

There’s also the credibility thing: Most websites that sell online in argentina are ugly and difficult, it just seems like they’re gonna break anytime (ive tried buying a computer from dell and failed miserably, also a ticket from ticketek, the biggest concert ticket salesplace, which actually required me to put all my personal information in before allowing me to put a sale). Overall, if i wherent a web developer i probably wouldnt ever use my credit card on an argentinian website.
Its not about hackers, its about the design.

Most people with some income have debit cards, cause there’s a weird law here that forces emplyers to give a bank account for each employee, which comes with a debit card. I haven’t seen any online store wich allows for debit card payments…

b.They also don’t seem to have ever heard about the long tail, cause most available music there is from the top sellers.

c.As they’re not making much business they’ve added lots of banners, urged for some revenue, making the website ugly and poorly usable, you cant find easily that you actually can buy music there.

I receive packages in the mail all the time, both from overseas (USA, Australia) and also locally.

Most of the times that mail is lost is because:

-It was sent with the cheapest option, with no tracking number (unregistered)

-The piece is actually delivered, but people living in apartment buildings often do not have individual mailboxes, so you have to rely on each building’s doorman willingness/expertise to hand-deliver the received mail at the end of the day, or sometimes people are left packages in front of their apartment door. Needless to say this is NOT very secure.

If the postal piece is sent registered, not only you have a tracking # that you can follow over the web at http://www.correoargentino.com.ar, but also the mailman will never leave it unless you sign for it. For small packages, you are left a notice and the receiver must go in person to his nearest post office to retrieve it.

FC

People don’t buy music online yet. They buy pirated discs, listen to the radio (as you said), and some download through p2p programs.

We had the same problem with the bank system many times in Argentina. Credit cards are not that hard to get, and e-commerce is solid. But the real problem is the mail: goods are lost, or stolen. It’s getting better, though.

Piracy is not linked to the use (or lack of) credit cards. It’s about price, since a cd is around 10 USD and a pirated one costs you 2 or ev en less. Maybe people buy pirated because they don’t have the means to buy online. But they wouldn’t buy at retail stores either.

Where you find retail outlets, you will find “top mantas”, or small pirates selling cds out in the street. There are small cd stores in small cities, but distribution is an issue. I don’t know if more retail stores would end up in better legal sales.

About your sales in the UK, that’s interesting. Reaching the right music buyers is a goal, but I think that those guys or girls want the actual cd. I am trying to compare what you say to what happens in my country, and I don’t see people in this niche market downloading from an online store. The non-urban buyers are scarce.

I can’t agree more with your idea on other territories. We won’t have a normal online music market in the next three or four years, if we ever have one. We are doing that export thing, but we need more!

The “free” advertising and distribution pirates offer to new/established acts is not a good thing. What we need here is more internet access for more users, so social networks, music sites, and online media can do that job.

Thanks for your questions and ideas, I really appreciate them.

You mentioned the postal service is not trust worthy so that can explain the slow pace of mail order consumption and the importance of buying direct from the act at live shows but one question I think needs asking is what role credit cards play in all this. itunes, shops like amazon, paypal and the rest all assume you have a bank account or a permanant residential address or a credit card. In this country most people i speak to have a bank account or sometimes a credit card or at least a permanant postal address which allows the buying of discs or downloads online. However in places like Ukraine, because the banking system collapsed in 1990 few people trust the concept of a bank, which can disappear with their money at any time. Of course, if you want a credit card you can’t get one unless you pay a very large deposit upfront(often more than the credit allowed on the card itself!!) or you have to have some sort of security to offer against the credit card like a bank account with a financial track record etc.

The piracy of music in terms of CD sales, how much do you think this is driven by the fact the people don’t buy using credit cards? Do you think that buying with cash from illegal sellers is more convenient than having to make your way into a city to buy from a shop at much higher prices? Do you think the fact that people don’t buy online is becuase they have no means to purchase online anyway?

Do you think the distribution of population versus the location of Music Retail outlets plays a part in all this too? Can people get to music shops easily or are they only found in the big cities?

In the UK I have noticed the majority of my online CD sales are going to places away from Urban areas and this suggests that I am selling to people who can’t get to the music shops easily or who have no access to specialist shops in their area. Of Course the postal service and the use of a credit card or paypal account usually generates the sale.

Another thought, surely if 55% of available music is pirated this is a great way to get your product into the market at no cost to yourself so playing live, merchandise, publishing income from radio play and advertising or film revenue, even some form of sponsorship would be the way forward until the music sales income situation can be resolved? Perhaps the answer is to licence music to other territories where the pirating problem is not so serious?

Easier said than done I understand but I think the Pirates have a role to play, but trying to harness the pirates to help work for you rather than against you maybe the big problem. I’m sure as a new band you would love to have your music pirated and sold all over the place but as an established act the pirates are clearly making money out of your hard work so there must be ways to get round the problem. I would be intersted to hear your thoughts on any of this.