Digital music: Now's the time, what's the platform?

Now that major music companies are starting to go beyond timid first attempts at offering their wares over the Internet, industry insiders are struggling to figure out which types of services and devices are best positioned to capture the hearts and minds of consumers.

Though much attention has focused on subscription music services for PC users, cable and satellite network operators may play a bigger role in digital music than has been expected, according to industry insiders at the Digital Music Forum in New York on Monday.

"The time for online music is now," was the key refrain, as well as the title, of the event's keynote address given by Chris Gorog, chief executive officer of Roxio Inc. Roxio last year bought the remaining assets of music-swapping service Napster, which had been knocked out of business by a lawsuit over copyright issues and recently has announced it will be entering the online music service market.

"One might suggest it's a knucklehead time to join the fray ... the landscape is full of buried bodies of people who tried to do this," Gorog said.

Gorog steered clear of detailing Roxio's music service plans, but he said several trends suggest that "legitimate" music services -- ones that have deals with music companies for copyright material -- can take off.

"The music labels have agreed to the download-and-burn model," allowing consumers to choose individual songs to download and copy onto CDs, he said. Previously, music services that had legitimate deals with music companies frequently did not allow users to copy songs onto CDs.

Another trend that bodes well is an increasing willingness to let consumers pay for one song at a time rather than charging a set fee for a set number of downloads per month, Gorog said.

Different types of consumers, depending on habits and preferences, will support different service models, said Sean Ryan, chief executive officer of Listen.com Inc.

"There is room for the subscription and the a la carte model," Ryan said.

Listen.com, which has contracts with the major music companies, until the end of the month is discounting single-song downloads to US$0.49, from the usual $0.99, Ryan noted. However, users also must sign up for a subscription to the company's US$9.95 monthly Rhapsody All Access service, which allows them to listen to as many songs as they like.

Payment for some subscription services in the future will be bundled in with the bill from the broadband provider that a consumer uses to get Internet access, Ryan said. He said Listen.com is partnering with broadband providers to offer tiered services, where the amount of music a consumer can listen and download depends on the price he is willing to pay.

"The real battle may be over the platform" used by consumers to get music in digital form, said Scott Kauffman, chairman and CEO of FullAudio Corp., which runs an online music service. Users may find that getting music from cable or satellite providers via a set-top box may be more convenient than using a PC and subscribing to a Web-based service, speakers here said.

"It's not going to be the PC, because then you have to pay for a (separate) subscription," said David Del Beccaro, CEO of Music Choice, a service that among other things allows users of the DirecTV Inc. satellite service to pay for songs online.

Most consumers eventually will get music services wrapped into offerings from cable or satellite services, avoiding separate fees for music, he said.

However, hurdles to digital music delivery remain.

A chief stumbling block is that some of the most famous tunes from "iconic" bands are not yet available for download and burning onto CDs, said Roxio's Gorog.

"Full CD recording needs to be allowed," said Gorog. "If I'm doing a party mix and I want to use a legitimate music service and there are five songs I can't burn onto a CD, but my neighbor using pirated music can, how's that going to make me feel?"

Gorog also advocated "common sense" digital rights management. "People want full output to all of their devices; they don't want to listen to music just on the PC."

To protect copyright material from being copied and distributed illegally, a variety of DRM schemes are being tested and implemented, but anything that prevents users from listening to music on any device they may own -- whether it's a stereo, a PC or a portable MP3 player -- is doomed to fail, he said.

On the other hand, he said, a major block in efforts to get music labels' full catalog into digital music services is piracy.

A legal haze surrounds the online music industry, as the Recording Industry Association of America Inc., which represents the major music companies, pursues lawsuits against file-swapping services such as Kazaa and Grokster, which let users trade songs online for free.

However, despite his vociferous opposition to such file-swapping services, when asked how Roxio would use its own technology to prevent piracy, Gorog insisted he did not want to "play policeman."

"One way to compete with this (piracy) is to create something that's better," he said. "There's an enormous amount of people out there quite willing to pay for fair and reasonably priced service."

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Marc Ferranti

IDG News Service

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