Technology: Fool's gold? Therush for the digital musicmarket begins

Fri 13th Feb, 2004 in Features

After much talk in music industry circles and beyond, Telstra’s BigpondMusic.com website is now on-line.  The site is one of the first of many planning to launch that are aiming to revolutionise how we buy our music with vast catalogues of songs available for download legally at a cost of approx $1.99 per track.
 
Other contenders getting ready to jump into the same space locally include nineMSN and an Australian version of the pioneering Apple iTunes site from the US.  A frantic global race has been happening behind the scenes to be first-in, best-dressed in the legal digital downloads market with everyone from the world’s biggest supermarket chain Walmart to global drinks giant Coca-Cola dipping their toes in the water.
 
There are many cynics within the music industry who question the likelihood that the millions of illegal downloaders will suddenly decide to start paying for tracks now that there is a legal option available.  With the record companies striking with all the might and force they can muster against bedroom offenders across the globe its likely that some people will take the legal option, but there will be plenty more who will give them the middle finger and stay one step ahead.
 
It seems the Bigponds and nineMSNs will be better able to target the new downloader - the type of person who has just been given an iPod for Christmas and wouldn’t have the know-how nor the drive to search out an illegal download site.  Ease of use is an important factor in this equation.  Unfortunately, without a universal method of downloading and listening to the music this process can seem quite complex, lengthy and ultimately difficult for the first time downloader to understand.  It seems that each site has a different media player that needs downloading with a different set of rules and differing terms and conditions for digital rights management. 
 
Of course Apple’s CEO Steve Jobs is using this very problem to his advantage.  By being the first in, he is wearing the Armani suit in the best-dressed stakes. By restricting the owners of iPods to using the Apple iTunes software he has systematically tied these people to his software.  But on the surface his motives seem quite different to the other players in the market: he wants to sell iPods, plain and simple. 

In a recent press conference, Jobs openly admitted that he does not make any money out of the sale of the tracks from the iTunes website. Nothing. Zilch. Nada.  So, where does the money go?  The answer is that most of it goes into the still bulging coffers of the 5 big boys of the recording industry.  This surprising admission leaves many begging the question: if you’re not selling iPods, why bother?   Well, it seems that almost all the players vying for space in this market all have something else to sell.  BigPond want to attract customers to their broadband service, Coca-Cola want to sell soft drinks and Walmart must be hoping that someone buys some new undies while they pick up Shakira’s latest horror.

So, who wins out of all this?  The record companies?  Maybe, but maybe not. With a bunch of inexperienced players suddenly donning their music retailers hats it seems that a price war of sorts could take place and in a volume business with little fat left in it, there’s nowhere to go but down in price.  There’s plenty of fat in a $30 CD – but not somuch on a track priced sometimes as low as 99c.
 
What about you, the punter?  If you’ve been downloading music illegally then you’re not likely to find a couple of bucks a track too appealing, but it seems that the scales may be tipping in the punters favour.  If the prices of tracks fall you could end up being able to shop around for your music and get it legally, easily and without fuss and all from the comfort of your home. 
 
With many experienced industry pundits predicting that the business model seems to have the potential to generate a whole lot of losers, I thought I should leave the last word to MP3.com founder Michael Robertson who recently commented, “It seems kind of crazy to me. The economics don’t make sense.  Why are all these guys like Microsoft and Wal-Mart rushing into a business where the industry leader says we cannot make money with the contracts that we have’?”  

 
“This is a race where the winner gets shot in the head.”
 
Guns at the ready!

Do you download music illegally? Are you willing to pay for MP3 downloads? Have your say and let us know your opinion: post a comment below.