Online Tunes: People Are Paying
By Brad King
2:00 a.m. Feb. 22, 2002 PST
Amid copyright infringement lawsuits, bankruptcies,
legislative battles and an overriding belief in some quarters
that they'll never turn a profit, digital music subscription
services are showing signs of good health.
Independently owned MusicMatch, which this week
surpassed 100,000 customers for its streaming radio
service, has become a beacon for Internet music
businesses.
"The fundamental
question in a
post-Napster era is,
'Can you create a
business model?' The
answer is yes," said
Aram Sinnreich, senior
analyst with Jupiter
Media Metrix.
"Consumers do
recognize value in
premium services."
MusicMatch
negotiated the tricky
licensing issues that
plagued other
companies and
settled a legal dispute with the recording
industry. That paved the way for
MusicMatch's Radio MX, which has become
the largest music-only subscription service.
Radio MX listeners can't choose specific
songs or the order they are played but they
can select genres and musicians that are
randomly played. It's not Napster but it
appeals to people who are tired of the din
of traditional radio, yet don't want to take
the time to download hundreds of songs.
Remarkably, the company also sold 1
million jukeboxes, the software application
that allows people to store, sort and play
digital music files. That's no small feat
considering RealNetworks, Microsoft,
America Online and even MusicMatch itself
offer scaled-down media players for free.
Those players have certain limitations, such
as the inability to burn CDs, which
consumers must pay to upgrade.
The fact that people are paying for digital
music could be the beginning of what many
hope will be the revival of a sonic boom that
hit full volume in 1999. The reason: Most
services, even Radio MX, offer only a
fraction of what consumers will eventually be
able to purchase.
"There are the people who like to pick every
track and those are our jukebox
customers," said Dennis Mudd, MusicMatch
CEO. "Radio MX is this ultimate lean back
experience. You click on a button and you
lean back and you get pretty much what you
want. The big opportunity is still reasonably
compelling on-demand licenses. We're at
the very tip of the iceberg until people can
get digital music downloads."
Well, that's actually one major problem.
People can already get digital downloads.
Napster's meteoric rise brought the concept
of file-sharing services to a mass audience.
The music industry immediately sued,
starting a legal war that forced the network
to shut down.
Unfortunately for the major record labels
and digital music companies, dozens of new
file-trading services filled the Napster void.
While the company continues to struggle in
its attempts to forge a settlement with the
Recording Industry Association of America,
millions of users continue to download other
file-sharing software.
AI
