November 4, 2005 4:00 AM PST

Digital music's move back to the Web

For several years, most companies selling music online have had an overriding strategy: Follow Apple Computer's iTunes in as many respects as possible.

That now seems to be changing in at least one important way. In the past few weeks, several of the biggest digital music providers said they are moving portions or all of their services onto the Web, as opposed to delivering downloads through a separate software application, as Apple does with its iTunes software.

The biggest to take this step so far is America Online, which announced Thursday that it had purchased the Circuit City-owned MusicNow and would adopt its Web-based music service as AOL's main store. Napster and RealNetworks also have said they would soon offer more access to their music though the Web, however.

News.context

What's new:
Several digital music providers say they are moving portions or all of their services onto the Web, as opposed to delivering downloads through a separate software application.

Bottom line:

This trend toward the Web by music services is part of a broader move by technology companies to offer increasingly powerful computing features on the Web that were once limited to computer desktops and hard drives.

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"What we've heard from customers is that anytime, anywhere access is extremely important," said Ed Fish, the AOL senior vice president in charge of music and other subscription services. "We wanted to integrate music with the rest of our programming, and to do that, we didn't want to require a (separate software) application."

This trend toward the Web by music services is part of a broader move by technology companies--most notably in Microsoft's new "Live" campaign--to offer increasingly powerful computing features on the Web that were once limited to computer desktops and hard drives.

The advantage, at least for music companies, is easier access to a broader number of customers. In theory, it's easier for a relatively unsophisticated consumer to visit a Web site and start listening to music immediately than it is to download a software application, install it, and go from there.

Web-based services are also available from any computer, and potentially even from mobile devices such as cell phones or portable players with Wi-Fi or other Net access features.

In practice, it's not clear that digital music consumers have gravitated this way. Although Web-based Internet radio services have been popular, Web-based digital music stores such as Wal-Mart, Buy.com, and Microsoft's MSN Music have accounted for only a tiny fraction of sales--about 1 percent to 2 percent of the overall market, according to the NPD Group.

Meanwhile, Apple's store, which requires all consumers to download the iTunes software, has consistently retained close to 80 percent market share.

Separate paths converging
All of the companies expanding their music businesses to Web-based services have parochial reasons for doing so.

RealNetworks--the first to hint that it would move access to its Rhapsody service onto the Web--did so as part of its antitrust settlement with Microsoft several weeks ago. CEO Rob Glaser joined with Bill Gates on stage to show off ways the two companies would work together, including allowing access to free Rhapsody songs directly through MSN.

Rhapsody already offers nonsubscribers the ability to listen to 25 songs a month for free, but requires that people download the software first.

Rival Napster hinted at its new plans in its quarterly earnings conference call on Wednesday. Providing few details, Chief Executive Officer Chris Gorog said that the company was preparing a new free, advertising-supported component of its music service that would live on the Napster.com Web site.

"The power of the Napster brand name drives millions of unique visitors our Web sites every month, where today they can do just one thing: download our subscription software," Gorog said. "Our intention is to...create the default music destination on the Web."

Gorog declined to give specifics on how much music would be available for free to visitors, or in what form, but he said the Web site would help Napster lower the cost of finding new subscribers to its paid subscription service.

AOL's plan is the most ambitious, and involves bringing music distribution in-house for the first time, after several years of partnering with MusicNet and even Apple.

The new AOL MusicNow service, available now in a preview form, will be relaunched by the end of the year, Fish said. The company plans on weaving access to music downloads and subscriptions in with some other of the company's popular products, such as the AOL Music Web site and the AIM instant message service.

That's part of a broader move across AOL to focus on reaching nonsubscribers as well as subscribers. Previously, its music store and monthly subscription services were available only to subscribers.

"We have 112 million unique visitors coming to AOL sites," Fish said. "We should make music available to those people as well."

Analysts look at the move of these companies to Web storefronts with some skepticism, although they note that each company's reasons are compelling. Cutting further into Apple's digital music market share will still require cutting into the overwhelming popularity of the iPod and the way that device has helped boost iTunes' fortunes, they say.

"What's worked so far is a link back to the portable device," said GartnerG2 analyst Mike McGuire. "As long as that's true, it's still going to be a challenge for these companies."

26 comments

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Digital music's move back to the Web
I really like this idea, I don't want extra software slowing my laptop down. I hope Itunes store would offer a web-store too.
__________________________________
R.K.
<a class="jive-link-external" href="http://www.Remove-All-Spyware.com/" target="_newWindow">http://www.Remove-All-Spyware.com/</a>
Posted by Roman12 (214 comments )
Reply Link Flag
Manage/Play
If you are using a website to download music, how are you going to manage your songs and play them? Don't you need another application for that. Also, if these companies are touting the web, they don't really mean the web!! They mean IE6 on Windows Web. Try telling them you have linux and want to use Firefox. Good luck!! Apple is not perfect, however at least they have iTunes working identically on Mac OS X and Windows.

All the other competitors are microsoft's slaves. They will tell you all about competition but within the Microsoft biosphere (they ignore the rest of the world).
Posted by bommai (172 comments )
Link Flag
Mental retardation?
Oh, so instead of using a single program to download AND PLAY
your music (ala iTunes), it somehow takes fewer programs to
DOWNLOAD the song, then use a seperate program to PLAY it?
Is math a forgotten art? iTunes=ONE PROGRAM to manage your
complete experience.
Web based services use TWO programs, your BROWSER and your
PLAYER.
I hope Napster et al die a slow and lingering death ;-)
Posted by GGGlen (491 comments )
Reply Link Flag
which browser(s)?
Different browsers can use different "players". If the latest Microsoft Media Player is required to play a song, and the user is on Linux with Firefox, it might not even be possible to play the song.

I believe AOL will not box itself in by restricting play, but they could, if they didn't think about it.
Posted by (3 comments )
Link Flag
Message has been deleted.
Posted by (18 comments )
Reply Link Flag
Sure does!
Yes, it makes perfect sense... just as long as the artists are being
paid royalties. If they aren't, then I hope you're willing to call it
what it is... THEFT.
If you're getting music that artists aren't being compensated for,
you're a thief and you're stealing. It can't be stated any easier than
that.
Posted by GGGlen (491 comments )
Link Flag
It should have remained on the web...
Having to download seperate applications sucks. I was planning on downloading a song from Napster the other night. I downloaded the software and searched their archive only to discover it was not available. Total waste of time. I will give it to MSN Music, atleast they let you browse their store from your web browser before you have to download a plugin for WMP.
Posted by PCCRomeo (432 comments )
Reply Link Flag
Why?
Why use the smaller stores when Apple's iTunes has the largest
collection of legally downloadable songs (and now videos and TV
shows) in the world? You would have probably found your song on
iTunes in one search.
Posted by clpdan (27 comments )
Link Flag
Rhapsody: just don't ruin it!
Rhapsody's first web client was awesome. Simple and easy to use. The most recent version, with it's DRM, different interface, and less-simple/more awkward navigation is making the service less intuitive. That, fewer songs are available as part of the subscription it seems (must buy). I fear the next rendition will spell the end of the Rhapsody that we all know and love. Message to Real and MSN: keep the spirit of the service intact. The population is just now understanding that their broadband connections are capable of music streaming.
Posted by (2 comments )
Reply Link Flag
Again. Windows Only.
Their problem is that both Rhapsody and MSN are Windows Only
services. Granted, Windows has the largest install base, but neither
service is winning points with users who run Linux and/or Mac OS
X and in many cases those users run Windows as well and therefore
seek applications and services that are cross platform. Corporate
America needs to get with the program - to get with what the
Internet is. They still do NOT get it.
Posted by clpdan (27 comments )
Link Flag
Works only for subscription, not purchase to own
The reason iTunes is required, instead of just a web browser, is
because the music companies have insisted that purchased
DRM'd music not travel from one MP3 player to another. MP3
players are not sophisticated enough to respect DRM. Only the
host software (iTunes, for example) is.

iTunes wipes your iPod clean and installs its own music library
onto it. Plug your iPod into a friend's computer, and your old
music library is gone. If it wasn't, then a rapid accumulation of
DRM'd music from various owners could occur. Bad for the
music companies.

So yes, subscription based stores can offer this through a web
browser alone. But purchase to own stores (like iTMS) require
separate software to comply with the music company's
demands.

Typical CNET reporting. A new music technology...blah blah
blah...not Apple...blah blah blah...Bill Gates.
Posted by (15 comments )
Reply Link Flag
Totally stupid way of using web
It is XP, Internet Explorer and Windows Media Player 10! only.

If they plan to sell legit downloads, they should respect the Mecca
of multimedia, OS X!
Posted by Ilgaz (573 comments )
Reply Link Flag
Agreed
Whatever is used should at least work on Windows *AND* Mac OS
X, especially since a lot of the music being produced was probably
done on a Mac to begin with!
Posted by clpdan (27 comments )
Link Flag
iTunes is for morons
Anybody paying for more than few songs of lossy-compressed + copy-protected music is a fool.

And yes, the large number of iTunes users does indicate that we are largely a nation of fools.

It would only be worth it if the songs were in a lossless compression format such as FLAC and not copy-protected.
Posted by georgegliddy (14 comments )
Reply Link Flag
Lossless Compression...
is very little compression at all. Copy protection is a legitimate
item for the copyright owner. MP3 is a very nice format for most
people who listen to music casually, like in a car. Most people
can't hear the difference between MP3 and AIFF or whatever. So
most people choose to go with what works very well, and is
easily found and used. Flac may be nice but it's just another
equivalent of ZIP and most people don't want to bother with the
arcane.

So chill out, wake up, and save the rant until you can find
someone who cares.
Posted by Earl Benser (4310 comments )
Link Flag
Not Morons
That would only work if 1) everyone had screaming broadband
connections (and I'm not talking cruddy DSL) and 2) everyone was
honest and would not give copies of the downloaded songs away to
everyone and their pet.

I don't think item #2 will happen anytime soon. It's a shame, but it
is true.
Posted by clpdan (27 comments )
Link Flag
Who's...
the bigger moron. Those who choose to buy their music one song at a time through legitimate sources, those who steal music because 'the record companies make to much money', or those who pay $20 for one song in lossless format CD's?

For me, I prefer to buy my music one song at a time. Unfortunatly I can't afford any stereo equipment that would allow me to tell the difference.
Posted by System Tyrant (1453 comments )
Link Flag
Of Fools and Morons
"Anybody paying for more than few songs of lossy-compressed + copy-protected music is a fool."

i must completely disagree. i'm sorry, but i set that line (the fool line) at the level of anyone who'd pay even a dime to listen to music for their phone's ringing. it's a ring, folks, not a song! ;-)

mark d.
Posted by markdoiron (1138 comments )
Link Flag
 

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