What was SanDisk thinking when it introduced the SlotMusic format?

This might seem confusing, but in a world where more and more people are obtaining music through digital means, notably the iTunes Music store, a consortium of music companies have introduced a new physical music distribution format called SlotMusic. The idea is simple: a read-only MicroSD card that has an album’s worth of music on it, along with – hopefully – additional digital information.
But is it the right product at the right time? I don’t think so. Let me explain why…
As we have seen again and again with the introduction of new media formats in the consumer electronics industry, there’s a classic chicken and egg problem when it’s released. That is, the industry won’t release lots of music on this new format until there are lots of players, but people won’t buy players until there’s lots of music available. The slow adoption of Blu-Ray and demise of HD-DVD are both examples of how this expensive problem plays out in the marketplace.
Clearly there needs to be a compelling reason for anyone to adopt a new music format like SlotMusic and while the vendors talk about simplicity and ease of use, the true key feature is that the music is available in the common MP3 format without digital rights management (DRM) restrictions.
Market penetration of MP3 players demonstrates that people really like digital music, but having a collection of tiny, fragile chips as your music library? Doesn’t seem like it’s going to work.
Further, there’s a classic pricing error in the positioning of SlotMusic too: at $14.99 suggested retail, it’s compared to the suggested retail of CD music, but a quick glance at someone like Amazon.com (Nasdaq: AMZN) shows that in fact almost all of the most popular CDs are $9.99. Why that price point? Because that’s exactly how much an album’s worth of music costs on the Apple (Nasdaq: AAPL) iTunes Store too.

SlotMusic Player from SanDisk

SanDisk’s SlotMusic player. Notice the tiny card: that’s the MicroSD device.

The only place I can find online that’s selling SlotMusic music is consumer electronics powerhouse Best Buy.com (NYSE: BBY), for, yes, $14.99/gizmo. (Wal-Mart (NYSE: WMT) is supposed to come online with SlotMusic material within a week or two).
To be fair, while it appears that you need to buy a new SlotMusic player to enjoy this new medium, each actually includes a USB adapter, making it easy to read them on your computer or laptop device (and then, presumably, copy it to your Mp3 player). There are cheesy low-end SanDisk (Nasdaq: SNDK) players that are cheap at $19.99, but do you really want to buy another player?
Nonetheless, even with the included USB adapter, it’s hard to imagine why anyone who is sufficiently plugged in to care about copying the material to their computer wouldn’t just use one of the many online music stores, skipping the MicroSD device entirely. (and note that while many users are unhappy about the DRM limitations of music downloaded from the iTunes Store, there are plenty of alternatives)
I’m not alone in being down on the future chances of SlotMusic either. A quick spin through the blogosphere will reveal that GigaOM, The NY Times, NewsOK and Technologizer and Engadget all agree that SlotMusic is destined to fail, not succeed.
I can only wonder why savvy tech company SanDisk even bothered with this half-baked technological effort that doesn’t address the cost of music, the percentage of the sale that goes to the artist, or the extraordinarily inefficient distribution channels and costs imposed therein. A way to distribute and sell CDs for $4.99, where $1 would go to the artist would be revolutionary.
A SlotMusic MicroSD physical distribution device for music in the age of digital downloads that retains the $14.99 collection of songs from popular artists is dead on arrival.

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