Wall Street Journal: ‘Online music shakeout appears to be under way’

“With too many players jostling for too few chairs in the online-music game, a long-predicted shakeout appears to be under way,” Nick Wingfield reports for The Wall Street Journal.

Wingfield reports that servies such as MusicNow, OD2, and others are actively searching to sell their online servcies or raise capital. And “Los Angeles-based Echo never launched its service and its plans are now on hold as it tries to figure out how to distinguish itself from other music sites.”

As for number two, Napster, less than 1/10th the size of Apple’s market-dominating iTunes Music Store, Wingfield reports, “Roxio said it expects its Napster service to post about $5.5 million in revenue for the calendar first quarter, up 53 percent from $3.6 million in revenue in the fourth quarter. What Roxio didn’t remind investors is that the company had launched Napster in late October. Had Napster been in business the full fourth quarter, Roxio had previously said it was on track to report $5 million in revenue then — meaning it had a mere 10 percent in sequential growth. Roxio’s shares now trade for less than half of their value prior to its reintroduction of Napster.”

Full article here.

28 Comments

  1. One thing that the impending demise of BuyMusic.com (YAY!!!) shows is that being Windows only / WMA compatible and locking out iPod users by no means whatsoever insures success. It also shows that underestimating the Mac market is stupid. iTMS is so successful, in very large part, because of the Mac community. Don’t forget that iTMS was the #1 paid music download service even before there was a Windows version.

    HP made a very wise decision indeed: if you can’t beat ’em, join ’em!

  2. “Whatever the approach to selling music, though, sales from commercial music sites are still small compared with the number of downloads from free, renegade alternatives like Sharman Networks Ltd.’s Kazaa, which have a much broader selection of music, most of it pirated.”

    Isn’t it ALL pirated….?

    “”We didn’t want to go out with a me-too, too-late service,” said Dan Hart, Echo’s chief executive.”

    Well, it is… or it will be

    -yawn- nothing new really

  3. gzero

    what would be the alternative to WMA for this services?
    MP3 or just open AAC without DRM?
    I’ve heard the argument before, but I’m not getting it (no sarcasm)
    what are the options?

  4. SsnMx:

    Anything that’s iPod compatible, which WMA is not. Of course, if Apple licensed FairPlay AAC, that would probably help the other services, and result in some lost sales for the iTMS, but perhaps even more sales of the iPod, so it’s really a win/win situation for Apple if they licensed FairPlay.

    BTW, at the CeBIT convention in Hannover, Germany a number of companies were showing AAC compatible cell phones, including market leader Nokia. Imagine if you could sync iTunes with your cell phone…

  5. On the ballyhoo’ed idea that Apple does not offer a subscription option for iTunes, tell me if this would make sense….

    Apple should offer a “subscription” service to its .Mac members, letting them listen and stream as much music as they want. This would offer a jealousy factor bar-none, cause Windows users would be pissed (and go buy a Mac) This would give more value to .Mac, enlisting more annual subscriptions. You would still need to buy the music in order to put it on your iPod.

    I would buy into this subscription model waaaaaaay before i tap into any of the existing ones because look at all the stuff you get with it, and when you add that up in annual costs, that’s cheaper than any of the other services, even if they bump the price to $129 for an iTunes Enhanced .Mac account.

    What do you guys think?

  6. Interesting idea that might work eaxit but I am not sure if Apple will go for it. They have stated again and again that “renting” music was what was wrong with the previous business models. It would be hard for them to about face on that.

    I might go for a streaming version for a while but actually I don’t listen to tunes that much on my computer and mostly do so on my ipod. I think other people DO listen on their computer more and so for people like that this would be of more intererest to them. You also have to remember tho that Apple is making the money on the iPod sales and not on the tunes so much (at least right now).

  7. Part of the problem with a subscription service, from an artists rights perspective, is you can take a program like AudioHijack and simply copy the music in WAV format. I think part of the reason Apple got the rights they did is because they took a number of steps to protect the rights of the artists (or at least make it more challenging).

  8. Jack A,

    All Steve has to do is say, this is the way streaming/subscription should be done. The right way, the apple way. I am sure they would come up with a way to protect the artist’s rights. How else are the other services able to offer subscriptions with the same catalog?

  9. “All Steve has to do is say, this is the way streaming/subscription should be done. The right way, the apple way”

    I’m sure at this point Steve could get anything he wanted. I might be willing to pay a bit more for my .Mac account but I’d have no interest in a subcription. I’m already considering spending $10/mo for XM radio in my new Audi (after paying $1,000 extra for the radio).

  10. Subscriptions won’t work and Apple does not need to offer them. I think the dot.com bust proves this. Everybody imagined that they could get us to pay for content, etc…. never happen.

  11. I agree with Citizen X – subscriptions won’t work.

    eaxit – one cannot have too many toys! Way off topic: I currently have an A4 Avant 1.8T but I’m debating between a new A4 or waiting for the A3 when it comes to the US. If any of you in Europe have any pro/con views on the A3 please send me a private email. Thanks.

  12. CitizenX,

    I am not saying to sell subscriptions for subscriptions sake, I was saying add value to it via .Mac, we already pay for it, why not add to it. If the PC world is paying for it, then if it is worth it to them and they know that they can still listen to all that music, then switch and get an enhanced .Mac account.

    Actually, I think I would be more inclined to buy more music if I listened to more of it. Right now, I buy cause I heard it on the radio on the way home or saw the video and decided to buy it. By this model i get to listen to a very small section of the music industry catalog. If I had the whole catalog at my disposal, hell yeah I would buy more cause I am exposed to more than just teeny bopper top-40 shit I hear everyday.

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