Today's music industry is often one step forward, one or two steps back. As progress is made in new formats, products and services, revenue is lost in the abandonment of older formats and products. With unlimited mobile music services on the horizon, now is the time to ponder their impact.

TNS Technology surveyed over 1,000 people aged 16-64 about unlimited mobile music services. The results hint that consumers' adoption of one technology is likely to have implications for other technologies. If they were to subscribe, the survey found, 45% would buy fewer CDs and 47% would buy fewer digital downloads. The survey is described in this article at The Guardian.

The billion-dollar question is, How many fewer CDs and downloads would you purchase? The article offers no indication, and answers would be guesses that couldn't carry too much weight. Respondents did, however, offer estimates on how many tracks they would download in a month. The average across all answers was 64 tracks. Respondents between 16 and 24 said they would download almost twice as many.

In their rush to push consumers to new digital services, labels may end up undermining their bread and butter product, the CD. To what degree CD sales will be negatively affected is unknown, but any prudent company should expect a decline. If services like Nokia's Comes With Music were to explode in popularity, the ripple effect that will hit retailers -- especially brick-and-mortar retailers -- could be substantial and could further reduce the amount of shelf space retailers give the CD (and, in some cases, further threaten the existence of some pure-play music retailers).

At the heart of the matter is the ongoing debate of substitution versus promotion. Do music services spur additional music sales or act as a substitute for purchases? Economist Stan Liebowitz has authored two papers that point to evidence that, as one paper put it, "listening to music radio is a substitute for non-specific music listening that might otherwise have used sound recordings."

The National Association of Broadcasters takes the other side of the argument and touts the promotion radio offers record labels. For what it's worth, the NAB's study on the promotional benefits of radio was funded by the NAB.

The record industry is aware of the issue and is leery of the substitution effect. In his October 2006 testimony before the Copyright Royalty Board, an executive for Sony BMG said "virtually all digital services are substitutional to some extent" and that satellite services "appear to be deeply substitutional."

Subscription downloads are a far better replacement for purchases than are subscription and terrestrial radio services. Again, it's difficult to predict the degree to which subscribers will cut their purchases. Even if they do, a subscription gives content owners more than the average American consumers' annual recorded music spend. The opportunity lies in the net gains from signing up light buyers. According to NPD, the average U.S. Internet user spent only $38 on music in 2007. A person who buys few CDs or downloads -- or none at all -- will become a much more profitable customer when signing up for an unlimited service. That's practically found money. There are far more light users than heavy users and thus they would hold great payoffs, but light users purchase less music for a reason. They're not as involved in music, don't place much value on it and, it stands to reason, would be less likely to pay for an unlimited mobile music subscription. The record industry would be best served if mobile music service can reach those light users.