Friday
Subscriptions, online stores vie for music fans
On the eve of the widely watched relaunch of Napster, the music industry's first casualty in its war against online piracy, another battle is raging in music cybersales and it's between two legal formats: paid subscriptions and a la carte stores, industry sources said on Wednesday.
This new conflict is a far cry from the one that put Napster, the formerly free song swap service that will relaunch as a paid service on Thursday, out of business.
But right now both platforms are vying for the hearts, minds and pocketbooks of Web-savvy music fans. Several analysts believe both will survive but that subscriptions may provide more revenues overall. Others argue a combination of the two is the key to the industry's success.
Since the world's big labels like AOL Time Warner Inc.'s AOL.N Warner Music and Vivendi Universal's V.N EAUG.PA Universal Music first took Napster to court for copyright infringement in 1999, the industry has tried to find ways to lure Web surfers into paying for online music.
Subscriptions, in which users pay a monthly fee to listen to as many songs as they like, were last year's hot business model. A la carte services, paying one price for each download, are this year's hot new trend.
The recent success of Apple Computer Inc.'s AAPL.O iTunes music store has been hailed by the record industry, spawning similar a la carte services like Buy.com and Musicmatch and overshadowing subscription services like MusicNet, Rhapsody and FullAudio.
'FOLLOW THE LEADER'
"Everybody's playing follow the leader. Subscriptions were hyped to death and now the a la cartes are being hyped. It's a false debate as to whether one is mutually exclusive of the other," said Alan McGlade, chief of MusicNet, which runs a subscription service through partners like America Online, a unit of AOL Time Warner.
"They are both valid ways to consume music, and we believe they are most interesting together," said McGlade.
Roxio Inc. ROXI.O , which bought Napster last year, believes it will be the strongest service to date due to its broad brand-name appeal and the fact it will be the first to offer consumers both an a la carte model and a subscription platform.
Rival subscription service Rhapsody, owned by RealNetworks Inc. RNWK.O , said Napster's two-pronged approach shows the subscription model is still strong.
"As the number of a la carte stores proliferates, the news about Napster is a reminder that subscription services continue to attract a wide audience of consumers," said Matt Graves, a spokesman for Rhapsody.
Jupiter Research forecasts online music spending to quadruple to $3.3 billion over the next five years from under $1 billion in 2003, but sees subscriptions as the more viable.
"Although downloads will appeal to a larger customer base, subscription services will realize greater value," Lee Black, a former Jupiter analyst, said in a July report.
John Bernoff, analyst with Forrester Research, echoed that sentiment in a recent report saying that by 2005, music buyers will recognize that acquiring music a la carte makes for costly collections and that as fans get more comfortable with online music, subscriptions will overshadow a la carte services.
This new conflict is a far cry from the one that put Napster, the formerly free song swap service that will relaunch as a paid service on Thursday, out of business.
But right now both platforms are vying for the hearts, minds and pocketbooks of Web-savvy music fans. Several analysts believe both will survive but that subscriptions may provide more revenues overall. Others argue a combination of the two is the key to the industry's success.
Since the world's big labels like AOL Time Warner Inc.'s AOL.N Warner Music and Vivendi Universal's V.N EAUG.PA Universal Music first took Napster to court for copyright infringement in 1999, the industry has tried to find ways to lure Web surfers into paying for online music.
Subscriptions, in which users pay a monthly fee to listen to as many songs as they like, were last year's hot business model. A la carte services, paying one price for each download, are this year's hot new trend.
The recent success of Apple Computer Inc.'s AAPL.O iTunes music store has been hailed by the record industry, spawning similar a la carte services like Buy.com and Musicmatch and overshadowing subscription services like MusicNet, Rhapsody and FullAudio.
'FOLLOW THE LEADER'
"Everybody's playing follow the leader. Subscriptions were hyped to death and now the a la cartes are being hyped. It's a false debate as to whether one is mutually exclusive of the other," said Alan McGlade, chief of MusicNet, which runs a subscription service through partners like America Online, a unit of AOL Time Warner.
"They are both valid ways to consume music, and we believe they are most interesting together," said McGlade.
Roxio Inc. ROXI.O , which bought Napster last year, believes it will be the strongest service to date due to its broad brand-name appeal and the fact it will be the first to offer consumers both an a la carte model and a subscription platform.
Rival subscription service Rhapsody, owned by RealNetworks Inc. RNWK.O , said Napster's two-pronged approach shows the subscription model is still strong.
"As the number of a la carte stores proliferates, the news about Napster is a reminder that subscription services continue to attract a wide audience of consumers," said Matt Graves, a spokesman for Rhapsody.
Jupiter Research forecasts online music spending to quadruple to $3.3 billion over the next five years from under $1 billion in 2003, but sees subscriptions as the more viable.
"Although downloads will appeal to a larger customer base, subscription services will realize greater value," Lee Black, a former Jupiter analyst, said in a July report.
John Bernoff, analyst with Forrester Research, echoed that sentiment in a recent report saying that by 2005, music buyers will recognize that acquiring music a la carte makes for costly collections and that as fans get more comfortable with online music, subscriptions will overshadow a la carte services.
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