C|Net News Looks At Music Download Services

December 28th, 2003 at 2:00 PM - News by Vern Seward

While some wrangle over what type of portable music player best suits them, the music industry is wrangling over which music delivery strategy will ultimately win out. Users buy and download what they want, when they want , and as many as they want from Appleis iTunes Music Store, but they stream their music from subscription services like RealNetworkis Rhapsody, or subscribe to services like eMusic, which lets them grab a certain number of songs per month for a monthly fee.

A recent article at C|Net takes a look at the current music down load strategies, and attempts to pick which one will ultimately reign triumphant. From the article Online musicis winners and losers :

Since May 2003, when Apple Computeris online music service iTunes opened its digital doors, the drums announcing other online music services--new enterprises as well as existing music services spruced up and recharged--have been steadily beating.

MusicMatch. BuyMusic. Rhapsody. Listen.com. Emusic.com. MusicNet.com. A new Napster, legitimized by Roxio, a vendor of multimedia programs. Wal-Mart. Even, it has been said, Microsoft and Virgin Entertainment Group.

Indications are strong that the companies behind the services have reason to think that profits can be made in online music. iTunes sold 20 million tracks in its first seven months of operation. Rhapsodyis 250,000 subscribers paid to listen to 28 million songs in October, up from 11 million in June. Between June and November, music lovers bought 7.7 million songs online, but only 4 million single-song CDs at stores.

The future looks good, too. Jupiter Research expects online music sales to grow to $3.3 billion by 2008. Forrester Research expects that within four years online music will account for 33 percent of the music industryis sales. But behind the vaunted successes and the optimistic predictions lurk at least two big questions: Which online music vendors, among the nearly one dozen operating today, have found the business model that will guarantee they will be around in 2008 to share the profits? Can the for-fee services make a dent in the billions of musical tracks exchanged, at no cost, on pirate networks?

The online music business models now being used include:

• The a la carte approach, favored by the likes of iTunes. Customers can buy individual tracks for 79 cents to $1.20 or albums for $9.99 and up, and buy as few or as many tracks as they want. They can--after downloading music to their hard drives--burn it to CDs, copy it to portable music players or, if they have the right equipment, stream it around the house by way of their existing entertainment centers.
• The subscription model. Customers pay a monthly fee and then download a specified number of songs each month. For $9.99 a month, emusic lets its customers download 40 songs and use them in whatever way the buyers want. For $14.99, customers get 65 songs.
• The streaming model, such as the one used by RealNetworksi Rhapsody. Music lovers pay a monthly fee, then listen to as many songs a month as they can stand. Downloading is extra, usually under a dollar a track.

The article goes on to discuss some of the advantages of of each model and is a good read. Stop by C|Net News for the full article.