Last week's US launch of MusicNet, a digital music subscription service
from media delivery company RealNetworks, with minority stakes held by
music giants EMI, BMG and Warner Music, shows that the major labels -
the industry power-brokers - are finally showing some initiative.
Similarly, Sony and Vivendi Universal are gearing up to launch
pressplay, and Bertelsmann's investment in Napster should see it
relaunch legitimately next year.
P2p subscription service Wippit has deals that include Associated
Independent Music (AIM), which makes music from artists such as Paul
Oakenfold and Iggy Pop available to download. Chief executive Paul Myers
says: "MusicNet won't have the same impact as Napster, simply because of
money. Napster was free, giving users an open-ended catalogue, whereas
MusicNet will have a limited catalogue."
Some of the services on offer effectively ask users to rent music,
allowing them to have a piece of audio for a limited time. Listen.com's
Rhapsody is one company that charges for streaming audio, a concept that
Myers describes as "putting a coin slot on a radio".
Both this and the MusicNet model baffle Myers. "Majors have no idea what
internet users want, which is why Napster happened," he says. "It's the
same for MusicNet and pressplay. They will offer a great service, but
with loads of content that users can't transfer to any portable device -
not even a Sony one."
If Napster returns, it will be a distribution platform for MusicNet
alongside RealNetworks and AOL. But Myers is doubtful about its
resurrection.
"It will never relaunch," he argues. "If Bertelsmann goes public, it is
not going to want a troublesome investment."
Free download sites continue to operate, and include MusicCity.com's
Morpheus and AudioGalaxy. Napster set a precedent in its previous
illegal incarnation, so users are used to getting something for
nothing.
Yet the British Phonographic Industry (BPI) points out that legitimate
sites have not set a precedent. Internet investigations executive
Jollyon Benn says: "The commercial advantage that unauthorised sites
have is access to entire recorded catalogues, including bootlegs and
remixes."
A spokesman for Napster argues that its key strength was not that it was
free. "Research indicates that its appeal was the freedom to discover
and access music whenever consumers want," he claims.
Musicindie, which is part-owned by AIM, has been negotiating online
licensing deals on behalf of AIM's members, who account for nearly a
quarter of British music. Managing director Gavin Robertson explains
that some labels are keen, some cautious, and others don't think it's
worth the effort.
He is negotiating dozens of licensing deals, and says that no two are
the same.
"The internet is just another option, and although Napster had 80
million users, that's nothing in comparison to the number of CD players
out there. We have to keep it in perspective," he argues.
If legitimate services capture consumers' imagination, there must be a
knock-on effect for high-street retailers. HMV has already signed a deal
with digital services company Tornado to enable games and music
downloads.
It is also looking at both a la carte and subscription services.
"We believe there will be a market, and it's some way off before it
reaches a significant level, but now is the time to put the building
blocks in place," explains Stuart Rowe, e-commerce director at HMV
Europe.
Rival V.Shop trialled in-store downloads in the summer, but Rowe thinks
that putting technology into branches is untenable. Not only does he
feel that the cost of installing it is prohibitive, but he estimates
that users could only download around 12 albums an hour - far less than
its cash registers can whisk through.
Although BPI's Benn feels that there is no hard evidence on the effect
of downloads on CD sales, Myers has noticed a possible link. "Last year,
CD sales in the UK and US were at an all-time high, as was Napster.
Sales slumped after Napster closed," he points out.
According to BPI figures for July and September, UK single and album
sales brought in £232 million, with an annual total value of
£1.2bn. Jupiter MMXI states that the digital music market is
barely large enough to measure in Europe.
Many believe that the industry will be reassured by the fact that the
major labels have finally acted. Richard Owens, international
intellectual property rights adviser at British Music Rights (BMR),
says: "With the majors involved, it gives it a little more
stability."
One route to market that services could take is through portals. If
consumers start out at a portal, the attraction of having a music
channel that aggregates the different digital services under one branded
umbrella must be a real one.
Digital distribution firm OD2, co-founded by musician Peter Gabriel, has
signed deals that will see a variety of music on its subscription-based
WebAudioNet platform. It has partnerships with Tiscali and
BTopenworld.
The Tiscali service is due to go live before Christmas.
"People will be happy to pay if it can guarantee added value, such as
interviews and information," says OD2 chief executive Charles
Grimsdale.
But the majors seem keen to keep it all in perspective. Patrick Reilly
of BMG in New York explains: "The world is not going to change until
everyone is on a high-speed line.
The fact is that people enjoy listening to music in different ways. Some
still listen to cassettes, others to portable MP3s, so it would be wrong
to place a heavy bet in any place in particular."
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