After years of false starts, the industry is showing the most promising signs yet that it is prepared to broadly license its content for online distribution. In the past few days alone, RealNetworks, Viacom's MTVi and Microsoft have announced separate music ventures aimed at bringing a wide selection of music to listeners online.
The thaw is possible partly because of a recent court decision reining in Napster, whose free file-swapping service has been credited with killing previous efforts to charge for music online. Still, there are many opportunities for missteps, with success depending on a host of details, such as pricing, ease of use and planned security features that have not been fully tested in the marketplace.
"The labels are doing their best to make the simple world of online music distribution into a complicated mess," said Steve Vonder Haar, an analyst at The Yankee Group. "The harder they make it to use, the more difficult it is to convince consumers to dip their toes in the water."
To date, consumers have mostly shown an affinity for downloaded music that they can store on their computers or take with them, as provided by services such as Napster. Pay-per-download services have been slow to take off, however, prompting most of the labels to gravitate toward other models.
Sony, for example, has sold downloads on a per-track basis over its Web site since last year but now is working on a joint venture with Vivendi Universal, dubbed Duet, to offer a music subscription service. It also is working on creating an Internet radio service called Sony XM, which is scheduled to debut later this summer.
"Downloading is a very difficult (business) because people don't want to pay," said Fujio Nishida, president of Sony Electronics.
Nishida said he believes subscription services will become the norm in the industry, but added that for now it is impossible to say what shape these services will eventually take. Consumers might go for a US$10 all-you-can-eat-for-a-month format, he said. Then again, they might not.
He said the exact terms of the Duet partnership remain vague, but new details will be announced soon.
