New music services reach for slice of digital pie

After 2006 -- a year when virtually no one managed to launch a digital music service in competition with Apple's dominant iTunes -- 2007 was a refreshing change of pace. Several fresh faces emerged onto the digital music scene this year, buoyed in part by record companies' newfound willingness to experiment with different business models, but also by the departure of several high-profile competitors. By far the most visible service to throw in the towel this year was MTV's Urge; now, a new entity called Rhapsody America joins Rhapsody's technology with MTV's editorial and music curation staff. Sony began the slow dimming of the switch on the struggling Connect music service. The company in August announced a gradual shutdown that will begin in March, laying off about 20 employees and reallocating the remainder to another division.

Zune, though, is hanging in there. This year, the Microsoft service was upgraded with a decidedly social networking-oriented strategy. The Zune Social initiative incorporates user profiles (called Zune Cards) that members can use to list their favorite artists, post widgets onto other social networking services and let others sample music in full-song fashion. Meanwhile, a host of such companies as Snocap and Lala tried a more "distributed commerce" approach -- where digital vending machines called "widgets" let artists offer downloads from their own social network profiles, as well as from their fans' profiles, rather than forcing consumers to visit digital megastores like iTunes. And the year ended with Radiohead's monumental decision to sell its new album directly from its Web site and let fans set the price.

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6 Comments

Hmm, a bit of a story summary:
- MTV Urge: Failed.
- Sony Connect: Failed.
- Zune: Hanging in there.
- Snocap: Has essentially failed by now. Cut staff by 60% in October.
- Amazon: Already considered #3 thanks to DRM-less mp3's from EMI, Universal, indie labels. (I think there's a lesson to learn here)
- Spiralfrog: New service on the block, both ad-supported and DRM-encumbered. The CEO left the company due to delays. (will probably be unsuccessful)
- Slacker: Ad-supported radio employing Wi-Fi, with a subscription option for extra features. (I fail to see the point with all the excellent free non-ad supported radio stations, a la Radio Paradise and Shoutcast radio)
- Imeem: Music service that started free and with some unlicensed music, but now filters and uses an ad system from the failed Snocap service to be loved by the RIAA.

Croquant said,
You forgot P2P services. They're far and away the more popular alternative to paying for music you're not allowed to use how you want. The RIAA and their DRM-friends can suck my dick.

Bravo, Bravo!

Down with itunes. Music distributed in non-physical media should be cheaper, and it's not. Worse quality (*) (uncompressed PCM audio vs. lossy audio), next-to-zero distribution costs (is it that expensive to send 3mb of a song to a customer?), and zero physical costs (no CD, no case, no booklet). Increased marketing costs, if anything. Not to mention DRM-free CDs vs. DRM downloaded files.

And yet it is as expensive as the real tangible thing. And yet people buy it!!


(*) For those who can actually hear the difference, not me for sure :P

I think the iTunes and iPod model is great - its by far the best digital media store and the ease in the way it sync's with the iPod is fantastic! Though I don't buy albums off there unless they are dead cheap!

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