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Dollars 4 downloads: the post-Napster era of paying for digital music has finally arrived. Was it worth the wait? (circuits).

Music's move from record stores to the Internet is raising plenty of questions, among them: Are the people who run the major record companies brain dead? Harsh, perhaps, but even record executives have been asking it of themselves.

The question is central to the online music debate. The five biggest record companies control about 85 percent of the music sold in the U.S. Last July, they sued and virtually shut down the Internet's most popular music-swapping service, Napster, and went after other sites that distribute copyrighted music without paying for it. Then, to fill the digital-music vacuum when listeners were clamoring for online alternatives, the record labels gave them ... nothing.

Some fear the companies may have blown their chance to capture millions of fans. Since the summer, users have flocked to emerging online services like Fast Track, which has become more popular than Napster ever was. Only now are the labels finally getting their acts together with official, pay-for-play sites. They're deciding how users can buy music online, how much it will cost, and what users will be able to do with it. Is that better than nothing? Maybe not.


One point is beyond dispute: There is a growing demand for music online, especially among teens, as traditional CD sales are slipping. A survey by the Pew Internet and American Life Project last year found that 53 percent of online teens download music. Among 15- to 17-year-old boys online, the figure was 73 percent. More than 80 million people had downloaded Napster's software before last July.

To take Napster's place, the five top record companies decided to launch two subscription services. AOL Time Warner, Bertelsmann, and EMI backed MusicNet, with a stable of artists including the Dave Matthews Band, Kid Rock, and Faith Hill. Universal and Sony--who have Destiny's Child, Shakira, and many more--financed Pressplay. The services were originally scheduled to launch last summer, then late summer, then in the fall. MusicNet and Pressplay didn't actually debut until last month.

In the meantime, Napster's top successor became the Fast Track network, which allows users to freely exchange music online, download and listen to it on their computers, move it to portable MP3 players, and even burn their own CDs. Fast Track tries to get around Napster's copyright problems by leaving the music swapping only between users, peer to peer, without involving its own computers, as Napster did. Fast Track offers free file-swapping software called Morpheus, KaZaA, and Grokster; if people use that to swap copyrighted music, Fast Track sees no evil and hears no evil.

The major record labels sued the Fast Track sites and others in October, even while their own services were still no-shows. "Lawsuits are meaningless unless they are coupled with a strategy for providing a legitimate service," says Eric Scheirer, an analyst who follows the music industry for Forrester Research. For months, the record companies made "no real progress" in putting music online, he says.


Critics say the labels dragged their feet, perhaps to preserve CD sales. But company executives say they were grappling with the business, legal, and technical complications of moving an entire industry from the physical world to cyberspace. They had to get permission from musicians to distribute their recordings online. They had to protect songs with encryption so that music could not be freely exchanged over the Internet. And they had to figure out a way to have risers pay for it.

Jay Samit, senior vice president for new media with the EMI label, has followed a guiding principle: "We have to make buying music as easy as stealing it."

An example of the new players is RealOne, launched on December 4, which uses MusicNet. For $9.95 a month, subscribers have access to about 75,000 songs from artists ranging from Britney Spears to Linkin Park. Each month, users get 100 song downloads and 100 song streams.

But there's a catch: RealOne's songs are accessible only on the Internet and are stored on the company's computers. At the end of the month, all the songs "expire" and users have to pay again to listen to the music. And users can't download to a portable player or burn their own CD mixes.

Pressplay, which kicked off in December, started with a database of 100,000 songs, though nothing at first from some stars. Its $9.95 monthly plan offers users 300 streams, 30 downloads that don't expire as long as you subscribe, and zero CD burns. The $24.95 platinum plan includes 1,000 streams, 100 downloads, and 20 burns.

It may be tough to charge users for less service when they're accustomed to more, for free. But record labels can never hope to survive if they simply give their music away. The companies also say that music listeners want artists to be fairly compensated, and that people will pay for fast, reliable, high-quality access to songs--something the free sites don't always offer. A recent Pew survey, though, found that when a Web site with free content began charging a fee, 86 percent of users abandoned it.

If the labels can amp up MusicNet and Pressplay to include features that music lovers can't live without, like access to a song weeks in advance of its release, the companies could thrive anew. But if the pay-for-play sites fizzle, while free sites continue to grow, the labels may find themselves facing the music.


As record labels launch subscription sites, online music swapping is at an all-time high. Here are the most popular PC audio programs from for the week that ended December 16. That same week, RealOne, which uses an official pay-for-play service, made its debut (see bottom of chart).

1. KaZaA Media Desktop 1,366,344

2. MusicCity Morpheus 1,275,954

3. BearShare 141,938

4. LimeWire 130,680

5. Nero Burning ROM 108,308

6. Winamp 101,968

7. Audiogalaxy Satellite 96,690

8. Microsoft Windows Media Player 49,079

9. WinMX 44,039

10. Sonique 41,613

37. RealOne Player 7,506
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Title Annotation:digital music becoming increasing available online
Author:Richtel, Matt
Publication:New York Times Upfront
Article Type:Brief Article
Geographic Code:1USA
Date:Jan 21, 2002
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