Sloveling Snocap, Walmart Madness

Snocap was an over-hyped tech play from the very beginning, primarily because of its association with the former Napster-era bad boy Shawn Fanning. It hinged its digital registry hopes on the mistiest of all vaporware that is/was Mashboxx, and never really found that marquee partner it needed to get established.

So it went to Plan B -- MyStores. Again, it made waves by becoming the vendor of choice for full-song downloads on MySpace. While it found the marquee partner it needed, this time the artists and labels didn't play ball. Dubbed "SnoScam" for the expensive per-track fees it charged via the service, Snocap failed to gain critical mass among the indie artists it was designed to attract.

None of this, however, means that Snocap's digital registry or download service weren't good ideas. They were just executed badly. Imeem was smart to pick up the service (at what is said to be bargain-basement prices compared to its $15 million-plus funding).

Imeem is an up-and-coming online music service that needs the functionality Snocap brings in order to effectively compete with MySpace Music. Specifically, imeem can use it to begin offering song downloads in addition to full-song streaming. That will give imeem a leg up over rival Last.fm, as well as prepare it for whatever MySpace has up its sleeve.

Now all imeem needs to do is get its label partners to start populating its site with music themselves, rather than waiting for users to do it for them, as well as tweak its playlisting interface a bit. Then we may start seeing some real competition in this space.


UNPLUGGED

So as part of its drive to go DRM-free, Wal-Mart had to stop selling music from Sony BMG and WMG because it hasn't yet finalized a deal with those labels to sell their catalog in an unprotected format. This seems particularly dunder-headed on several levels.

The move is an obvious negotiating ploy, and one that will fail miserably. Wal-Mart hopes that by blaming thick-headed labels it will somehow put public pressure on them to relent and offer a better deal. That hasn't worked in the past (EMI just broke off negotiations with the services that tried this exact tactic when it was shopping around for a DRM-free partner, and just struck a deal with Apple instead).

Does Wal-Mart think that either Sony BMG or WMG are going to lose sleep over not having their catalog on its digital music service? The store is the very definition of also-ran in the digital music space. If the whole thing closed down tomorrow the labels wouldn't even notice.

Yes, going DRM-free will likely help its prospects, but it would make much more sense to have a little patience and get all the deals necessary before making the switch. What happens now is that the few customers Wal-Mart had buying music online will now go elsewhere to get their music, because it no longer has a complete catalog. Then, when and if Wal-Mart finally gets the deals needed, it will have to spend heavily to re-acquire those customers (and don't hold your breath on it being successful in doing so, either).

Wal-Mart isn't the only former DRM-laden service trying to take advantage of this new age of freedom. Napster is working on doing the same for a la carte downloads. But that service is waiting for all the deals to get in place first, and has enlisted the help of heavyweight mobile partner AT&T to put pressure on the labels to strike workable deals.

Wal-Mart needs no such partner to apply similar pressure. It's only the dominate CD retailer in the country. Can anybody think how that might be leveraged? But Wal-Mart hasn't done anything to tie its digital music service with its physical one, not with its deal-making activities and most certainly not with its marketing.

This little squabble with the labels is a red herring. Wal-Mart's digital music woes go far deeper than whether or not it sells music or without DRM, and the onus lies with the company itself to turn things around.