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| DATE | 2003-03-01 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [hangout] Digital Music
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Date: Sat, 1 Mar 2003 18:01:19 -0500
From: Ruben Safir
To: fairuse-at-nylxs.com, hangout-at-nylxs.com
Subject: [hangout] Digital Music
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http://www.nytimes.com/2003/02/26/technology/26MUSI.html?pagewanted=print&position=top
>
February 26, 2003 AOL Offering Music Catalog for Downloads By SAUL HANSELL
In the strongest attempt yet to create a legitimate alternative to free
music-trading sites, America Online will introduce a service today that
lets users download and listen to a large catalog of songs.
For $8.95 a month, users will be able to listen to a catalog of music,
now at 250,000 songs and growing, on their computers. Moving songs to
CD's or portable players will cost more.
AOL is selling a version of a service from MusicNet, which is a consortium
of RealNetworks; the BMG unit of Bertelsmann; EMI; and Warner Music,
which like America Online is a unit of AOL Time Warner. AOL refused to
introduce MusicNet's first product a year ago, arguing that it was too
hard to use and did not have enough music.
Now AOL says that the service has improved enough to offer it to its
27 million members. That represents the most important test yet for
the concept of selling music as a subscription service rather than as
discrete discs.
For AOL, MusicNet also represents a crucial part of its strategy to
increase its tiny share of the market for Internet users who connect
over high-speed, or broadband, connections. AOL is already promoting
its free music content, which includes hundreds of songs, videos and
original recordings of musicians.
In the next few weeks, AOL is going to introduce an improved $15-a-month
service, with a bundle of content and services meant for people
who already buy broadband connections from their cable or telephone
companies. That offering will include a limited version of MusicNet that
will let users download 20 songs a month and listen to another 20 one
time. Others can buy this limited version for $3.95 a month.
The standard $8.95 version of the service will allow users to listen to
an unlimited number of songs on demand while they are connected to the
Internet through a technology called streaming. They can also download
the songs to their computers for higher sound quality and the ability
to listen to them when not on the Internet.
Unlike music downloaded from Napster, the defunct free music sharing
service, and its successors like KaZaA, a subscriber can listen to
MusicNet's downloads on no more than two computers. They also cannot be
copied to other devices or sent to other people.
But a premium version of the service, for $17.95 a month, gives users
the right to burn 10 songs a month onto a recordable CD. These will be
in the standard, unprotected format used by all music CD's, and thus
those songs could be copied, converted to a popular format like MP3 and
sent over the Internet at will.
So far, legitimate music download services have not been a success with
consumers, not only because they charge a fee but also because the first
versions had very limited numbers of songs and even more draconian rules
about what users could do with them.
MusicNet initially had songs only from its owners and some independent
labels. Its main rival, PressPlay, was formed by Sony Music and Universal
Music.
By late last year, MusicNet and PressPlay each reached agreements with
all the major labels and many independent labels as well. An independent
service sold by Listen.com, called Rhapsody, also allows users to listen
to songs from all the major labels and to burn some of them to CD's for
$9.95 a month. Rhapsody is trying to attract attention with a limited-time
offer that allows users to download individual songs at 49 cents, half
its regular price.
With its $8.95 standard tier, AOL is undercutting the $9.95 basic price
of PressPlay, which is mainly sold by Yahoo and Microsoft. The only
other version of MusicNet, offered by RealOne, costs $4.95 a month for
100 downloads and 100 one-time streams.
So far, none of these services have attracted more than a few tens of
thousands of subscribers. Somewhat more popular are online radio services
that let users pick the style or even artist they want to listen to but
not the actual song. MusicMatch, for example, has 120,000 subscribers
to its radio service at $2.95 to $4.95 a month.
Kevin Conroy, the AOL senior vice president for entertainment, said
its version of MusicNet would be far more popular because it would be
integrated into the AOL service. Users will simply add the MusicNet fee
to their existing AOL account and credit card numbers. And for those
who subscribe to the MusicNet service, AOL's music programming, which
attracts 12 million users a month, will be laced with links that will
start songs playing.
Mr. Conroy added that he thought that even some users of KaZaA would be
attracted because AOL's service downloads faster and does not have the
errors and delays of the free music trading services.
" Right now it takes 8 or 10 searches to find what you are looking for on
services like KaZaA because so many files are mislabled," he said. "We
have forced people to do illegal things because we have not offered an
easy, convenient mainstream way for them to do what they wanted."
AOL said that it had rights to another 80,000 songs that it would add
to the service in coming months. This represents about half the popular
music that is now in circulation. Much of the most popular material,
from artists like Madonna and the Beatles, has not been made available
on these downloading services, however.
But new artists generally sign deals that give labels the electronic
rights to their works. For example, "Come Away With Me'` by Norah Jones,
which won the Grammy for album of the year on Sunday, is available on the
service for listening and downloading, but it cannot be burned to a CD.
The labels, artists and music publishers are paid a share of the monthly
fees on all of these services in proportion to how much their songs are
listened to. They also get a share of the fee paid when songs are burned
to CD's.
Paul-Jon McNealy, the research director for media at Gartner G2, said that
with the latest releases of MusicNet and PressPlay, the music industry
has eliminated most, but not all, barriers to creating an online service
that will attract music fans.
"This is close to what people will find palatable," he said. The MusicNet
on AOL service, he said, will be a good introduction to online music
for a mainstream audience, but the limitations are still significant.
"People want to buy their music once and own it forever," he said.
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