Psonar aims at pirates with penny-per-play songs

Psonar, a digital music locker service, is reinventing itself as the next iTunes - and its creators believe that it has the potential to sway users away from illegitimate music sources and turn pirates into a revenue stream. To find out how, we've had a chat with Psonar's Martin Rigby.

The company launched its original service back in 2009: a digital lock-box that stored your audio files in the cloud, presenting them on a mobile-friendly, web-based interface that allowed its users to enjoy their music no matter where they were in the world. While it enjoyed a certain level of success - chalking up around 20,000 users across the world - it's never been one of the bigger players in the industry.

Its creators have decided to forge ahead with a new business plan, becoming a retailer - but not in the traditional sense. Building on its existing cross-platform streaming service, Psonar is launching a pay-to-play shop that makes legitimately listening to music as easy as piracy - and almost as cheap.

"The proposition we came up with to meet the needs of what we call the 'mobile user generation' is Psonar Pay For Play," Rigby explained to thinq_ during our interview. "The idea behind it is very simple: you pay one penny, one cent, or one Eurocent to listen to one track once, and if you listen to playlists or an album then you pay the same price - one penny, one cent, or one Eurocent for each track in the album."

The pay-for-play model isn't one that the big players in the industry have implemented in the past: Spotify, one of the most well-known names in streaming music, uses a 'freemium' model where flat-rate subscription payments are used to gain advert-free access to the entire music archive, while services like iTunes allow you to buy a track outright for a pre-set fee. It's a model that Rigby and the team at Psonar believe has the most potential to sway people away from what remains one of the most common music distribution methods: illegitimate peer-to-peer sharing.

"We think of ourselves as being very complementary to the other streaming services," Rigby claimed, "enabling people that otherwise wouldn't have access to legal on-line streaming services and who want to use the music in a different way the ability to use digital music on that basis."

The 'different way' that Rigby mentions is the key of Psonar's platform: social integration. While services like Spotify offer the ability to recommend tracks and albums to friends, Psonar's service is built around a deeply-integrated core of social music sharing - and all without getting the rights holders in a lather.

"Social is the key component for us," claimed Rigby. "Psonar is deeply social - and by that I mean that it's driven by gifting and sharing. We're designing a range of incentives encouraging people to share music with each other, and these are all very easy to build into the service - much easier than it was possible with [spiritual predecessor] MySpace Music."

The sharing service works in a similar way to existing systems like Spotify: individual tracks, albums, or custom playlists can be shared via blog posts, Twitter messages, or Facebook updates created directly on the platform. A user that clicks on a Psonar link will be able to play the music immediately if they are already a user with credit loaded on to the service, while those who aren't will be able to sign up directly on their desktop or mobile device.

For the more generous sharer, Psonar offers a 'gifting' service where the cost of the playback - one penny per track per play - can be pre-paid by the sender, allowing the receiver to immediately listen even if they do not have credit registered with the service.

"The way the credit works is that it gets billed to your mobile phone bill or we can take that off your credit card," Rigby explained - using a micropayment platform to encourage users to sign up for the service and start paying for music rather than downloading it for free from elsewhere.

That's one of Psonar's biggest challenges, Rigby told us. "What keeps me awake at night: is a penny a play cheap enough? We are, in the end, competing with free - are we right in saying that we can convert people who would otherwise be using piracy into paying a penny per play?"

It's a difficult question to answer. While Psonar's pricing is as low as you can realistically get for a single playback of a track, it's still more expensive than piracy - or legitimate ad-supported streaming services such as Spotify. While only the service's reception at launch will truly answer the question, a survey carried out of the company's digital locker customers suggests that the rock-bottom pricing of Psonar's pay-to-play model is being received positively.

While Psonar is looking to drive membership and revenue via its 'deeply social' sharing platform, it's the mobile market that the company is concentrating on. Last month, Martin Scott at Analysys Mason suggested that the provision of premium mobile services is a good way to convert browsers into paying customers - and that's a sentiment with which Rigby is in complete agreement.

"Our strategy is to launch with an iPhone and an Android app, and we're looking at developing a BlackBerry app to follow on soon afterwards," Rigby explained. "We've got the iPhone app already in alpha testing. When we launch this summer, we're going to have only connected downloads - you have to be able to stream over some sort of network, either Wi-Fi or 3G. The second generation service, the apps that we're delivering are going to look at caching music - so you can use the Wi-Fi connection to download the music into the app and then consume it offline at your convenience, all on the basis of pay-per-play."

It's the initial reliance on streaming that has Rigby worried. With mobile networks cracking down on the growth of smartphones by reducing the data allowances provided with most contracts - and upping the per-megabyte charges to ridiculous levels for those on pay-as-you-go services - mobile streaming services face a tough future.

"I think that any restriction or any rationing by the networks is potentially damaging to all streaming media services," claimed Rigby. "We hope that LTE 4G is going to solve some of those problems in the longer term, but we've got to do something about it as well - like the idea of having a caching app on the phone that you can download music into when you're connected via Wi-Fi and then listen to it when you're no longer connected."

The biggest barrier for any music service is getting permission from the rights holders to add music to the catalogue - and Psonar is no exception to that rule. "We've had a lot of enthusiasm from the labels from both Canada and in the UK. The more difficult challenge is the publishers, who have a much more trenchant, monopolistic, somewhat Luddite view of new services," Rigby complained - although he admitted that the Performing Rights Society in the UK is an exception, holding a far more progressive viewpoint to the evolution of the music industry than its international brethren.

Psonar's original business model, a cloud-based storage locker for your digital media, has been most recently seen in Amazon's Cloud Drive and Cloud Player services - and the company is now entering a segment of the market where there is additional competition from long-standing players like Spotify and Last.fm and newcomers such as, rumour has it, telecoms giant BT.

"The thing about companies like BT," Rigby claimed, "is that they tend to reinvent the wheel. We're very much focused on those who want to do something which is social and those that are likely to be looking for value for money, so we see services like that as being complementary to what we're doing."

When Psonar's pay-per-play service fully launches in the summer, it's going to be entering a crowded market, but the company's focus on encouraging users to evangelise about the music they love - and, by extension, the Psonar service itself - could be enough to convince those on a budget to part with their cash.

Whether any paid-for service can ever truly convert the pirates, however, remains to be seen.