August 7, 2005

The Evolving Music eTailing Market [12:05 pm]

Britney to Rent, Lease or Buy

Using Grokster, or similar services like Kazaa, always entailed a degree of risk, from PC virus and spyware infections. Getting sued - a frequent recording-industry tactic - is never a highlight of anyone’s day, either. And now the courts are getting involved. What’s a music-download fan to do - actually pay for music?

If it comes to that, they’ll find that a lot has changed in the online music business since Apple opened its wildly successful buck-a-song iTunes Music Store in 2003. [...]

One intriguing alternative is the subscription plan allowing unlimited downloads that is currently offered by Napster, Yahoo and Rhapsody. (Each also maintains a traditional $1-a-song service.) Microsoft, Target, MTV and AOL have also announced plans to get into this subscription business, and even Apple is rumored be interested.

The tantalizing concept: instead of buying songs one at a time, pay a monthly fee for the rights to the entire million-song library. On the Napster to Go plan, for example, you can fill your computer and your pocket music player over and over again with as much music as you like, for $15 a month.

Unfortunately, there’s enough fine print to fill a phone book. The biggest footnote is that if you ever stop paying the fee, you’re left with nothing but memories; all the music self-destructs. You’re not buying songs under this plan - you’re just renting them. (A famous Napster ad claims that filling an iPod, at $1 a song, would cost you $10,000. But you could just as truthfully say that, under Napster’s plan, listening to one favorite song for 20 years would cost you $3,600.)

[...] If the Grokster ruling doesn’t change the way things are going, the record industry may have to consider more radical solutions, like embedding every song file with a serial number. That way, customers could freely copy their songs for personal purposes, but would avoid posting them online for fear of being hunted down. Or maybe the record companies should deliberately release free, low-quality song files to the Internet. Music fans would be able to discover new bands and albums as they do using Grokster, but would have to pay for the full-quality versions of their favorites.

One thing, though, is already clear: the downloadable-music business is still in its fumbling, bumbling infancy.

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