Yahoo Is Clearly Up To Something Big Around Music

There have been rumors that Yahoo Music is preparing to launch a big new product sometime soon. And when I read this overview of a presentation given by Yahoo Music’s VP of Product Development Ian Rogers last month it basically confirmed it for me: expect something new and interesting from Yahoo Music in the near future.

Some background: Rogers, along with former Yahoo music GM David Goldberg, was one of the first music industry insiders to actively call for the dismantling of the DRM machine (I interviewed both early last year).

Rogers also made an impassioned speech last October calling for sanity in the music industry. “Inconvenience doesn’t scale,” he said. And – suing Napster for popularizing music sharing was “like throwing Newton in jail for popularizing the concept of gravity.” He ended that talk by saying he wouldn’t let Yahoo spend any more money on flawed music models. He specifically called all-you-can-eat subscription models flawed; and Yahoo is a big provider of that service already.

He went even further in his most recent talk. The first part was a rehashing of previous presentations where he said “we’ve been trying to apply our physical world models to the digital space and then wondering why they don’t work. It’s like trying to live a normal life on the moon without adjusting to the changes in oxygen and gravity.” In one slide he suggests iTunes is nothing more than the application of old business models (represented by spreadsheets) and ownership over music content, resulting in an uninspiring product. People don’t want to just listen to what the record labels say they should listen to. They want to consume the content that people they trust recommend to them.

But he went further this time, saying “We’re in the process of redefining what Yahoo! Music is, and making it the Music destination in Yahoo!’s successful image.” He also says Yahoo isn’t a music retailer and suggests they won’t be in the future.

So what are they up to? He is championing the merger of content (which is what the labels control) with context (all the great user generated content around the passion of music – popular songs, MySpace content, blog posts around new music, etc. This is a well of useful contextual information that helps people decide what they want to consume. He calls for the evolution of open standards to facilitate this goal – making media “a first-class object in HTML,” agreeing on ways to describe collections of media objects (playlists), standards for sharing user data, and defining services (search, resolution of media between services, and purchase or provisioning).

It’s clear that Yahoo wants to move in this direction. Their music site consists of great content but, other than the doomed subscription service, lacks any retail features. It’s unlikely Yahoo wants to get into the music sales game. Not only did Rogers say as much in the presentation, but it’s a very low margin business. Instead, and this is just an educated guess, it looks like Yahoo wants to spearhead an effort to create open standards around music buying, playing, managing and sharing. If that wasn’t the direction they were going, the presentation makes little sense.

In one set of slides near the end of the presentation, he shows a use case where a user discovers music on Yahoo, links to purchase it at Amazon, and then manages it again back at Yahoo. My guess is this is exactly what Yahoo will be. They’ll abandon their subscription music service (Rogers previously said the model was deeply flawed and has failed to get many users) and promote third party music download sites like Amazon instead. But I also imagine they’ll do this via a set of open standards where any service can participate. Yahoo is the worlds largest music site, so they can afford to be inclusive. It’s likely they’ll manage to keep their fair share of the users, even in an open world.

Half of me hopes that Yahoo pulls the plug on the project before it launches. What I’d really like to see is Rogers leave Yahoo and create a new startup based on the principles he believes in, without any compromise. Now that could be something interesting.