Phonoline

» see phonoline.de as it lived, on the wayback machine

~ the last words ~

Phonoline was the German record industry's answer to a question every label in Europe was asking in 2001: what do we put in front of people so they stop downloading for free. The answer the Phonoverband settled on was a wholesale pipe. Sixteen labels would pour their catalogs into one technical platform, Deutsche Telekom's T-Com would run it, and any website in Germany could then open a music shop on top without having to negotiate with Universal or Sony directly.

Planning started in 2001 and the launch date kept moving. Sometimes the reason given was technical. Sometimes it was the fight with GEMA over what the collecting society should be paid per track. Three years of delay is a lot to absorb when the market beneath you is being rebuilt by somebody else while you argue over a royalty rate.

It finally opened at CeBIT in March 2004, and the trade press put Chancellor Gerhard Schröder's name in the headline, which says plenty about how the industry was pitching the stakes. Six months later it was finished. On 27 September 2004 Deutsche Telekom announced from Bonn that Phonoline was being shut and that music downloads would be concentrated at its subsidiary T-Online, where a store called Musicload had been running since October 2003. The reasons the press reported were customer indifference and technical trouble, with the iTunes Music Store having opened in Germany that June.

~ the record ~

~ the wholesale idea ~

Phonoline was never a shop you were supposed to visit. It was infrastructure, and the retail layer was deliberately left to other people: Phonoline sold to internet marketers, who would build the storefronts and keep the customers. You could burn what you bought onto a CD or move it to an MP3 player, which in 2004 was a genuine selling point against the copy protection everyone else was shipping.

It is a reasonable design if your competition is other wholesalers. Apple was not one. The iTunes Music Store had opened in the United States in April 2003 and reached Germany in June 2004, with the shop and the player built as a single object, and it took the market while Phonoline was still recruiting retailers to build on top of it.

~ the refund request ~

Very little, and the people paying said so out loud while it was still running. In August 2004 the head of BMG Germany told the trade paper Musikwoche that he saw Phonoline extremely critically, that the company should get back the money it had put in, and that the whole thing was madness. That is a shareholder in a joint venture publicly asking for a refund five months after launch.

Telekom ended up paying damages in the millions after the platform was dropped. For an industry project built specifically to demonstrate that the German music business could organize itself, it is hard to find a worse ending than a compensation payment.

~ where the catalog went ~

Nothing resembling Phonoline was ever attempted in Turkey, and iTunes did not open there for years either. Through my university period in Ankara the question of where music came from had a practical answer and no commercial one. The committee is the part that travels. Sixteen companies decided that the way to beat something free was to agree on a specification, and then spent three years agreeing.

The catalog ended up at Musicload, which had been selling since before Phonoline opened and simply absorbed what was left of it. Musicload ran another decade of its own and died on 28 May 2014, by which time nobody was arguing about downloads any more.

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