Napster, Apple, MusicMatch etc etc

DISCLAIMER: this Blog entry is for once entirely US centric – most of what I am about to talk about simply doesn’t apply to Europe, so don’t think I am suddenly getting blindly enthusiastic about Europe’s online music market!

It makes a pleasant change to talk about an increasingly bustling market place. It seems like the corner is rapidly being turned. With Napster, MusicMatch and Apple all entering the market with comprehensive services with liberal burning and porting restrictions the legitimate sector is at last able to compete with the illegal sector. Of course we’re not there yet. There are still big gaps in the catalogue etc and the price points and product specs need some further tweaking, but I think we are past the major hurdles.

I have frequently stated how legitimate music services have been held back by the nature of the licenses granted to them by the record labels. I don’t think that argument applies today in the way that it did. The labels have recognised the importance of the Internet as a distribution and marketing medium and are empowering the legitimate music services to fulfil its potential. Eventually the rights owners who are withholding content from online distribution will bring their catalogue to the table, once they feel confident about the medium, and more pertinently, when they realise that there is money to be made.

There is a lot of talk about just which type of service will succeed. Who will win? Apple? Napster? Ultimately no single service will win. One size does not fit all and different services will appeal to different types of consumers. Ultimately online music distribution will inhabit a middle ground between retailing and programming, with some services skewed more heavily to one side of the equation than the other.

But there is still room for improvement. The labels are doing their bit, now it is down to the services to do their bit. Apple have successfully developed a service which operates seamlessly with a portable device, Napster have developed compelling content and programming to underpin their service. But one thing the services lack, is truly compelling free content. The majority of online consumers are simply not ready to pay for content online yet, they will, but not yet. In the interim they need to be brought into the legitimate fold and offered (lower quality, streaming) free content contextualized by tiered paid services so that they learn that if they want high quality, permanent content, they need to pay for it. If the illegal sector is quashed and free legal content isn’t put into place, a massive vacuum will be created. At the best this will simply lead to the emergence of new P2P networks. At the worst it will kill off a massive increase in consumer demand for music – the new music behaviour patterns should be harnessed, not crushed.

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