The new Kazaa appears to be mostly a run-of-the-mill subscription music service, but it does add a few new twists. The one that stands out right from the sign-up phase is that subscribers can either pay by credit card or via their telephone company.
(Credit:
Kazaa.com)
"Brilliant Digital Entertainment Inc. (BDE) and Kazaa are not affiliated with your local telephone company," Kazaa writes in the company's terms of service, "However, for your convenience, BDE's charges will appear on your local telephone bill."
Music industry insiders have long talked about creating subscription services in partnership with Internet service providers, who could tuck monthly charges into a phone bill. The thinking is that consumers would be less likely to feel the pinch of by monthly fees if they were mixed in with all the other fees found in typical phone bill.
These ISP-music stores have yet to emerge in any significant way, but Kazaa's subscription service, announced Monday, appears to borrow this idea in an attempt to make the $20 monthly charges a little more palatable.
One of the main problems I saw this weekend when I tried out Kazaa's new service was that in order to post the charges to my phone bill, the company asked me to submit my Social Security number. That is bound to spook plenty of people.
Ring-tone companies have charged customers this way for a while, but to the best of my knowledge, not another major music service offers a similar payment option.
After becoming one of the world's most popular file-sharing programs, Kazaa was nearly sued out of existence several years ago. The new iteration is much more legal, if not much more routine.
The songs are protected by digital rights management, which is the norm for most subscription services. The service supports PCs only, not Mac or Linux, which means it is not compatible with iPods. Of course, like most subscription services, when a person stops paying, they lose their songs.
Brilliant Digital Entertainment, Kazaa's parent company, appears to be betting that Kazaa's brand will give it an advantage in a U.S. market, which has seen a score of music subscription services come and go. None of them have found a significant audience.
LOS ANGELES--For anybody wondering why Microsoft and the top record labels continue to promote subscription music services, the answer was revealed Thursday.
Label exec David Ring says download sales by themselves won't solve music industry's woes.
(Credit: Universal Music Group)David Ring, executive vice president of business development for Universal Music Group's digital arm, said at the EconMusic Conference that the recording industry simply can't sustain itself with download sales alone.
"If what we're trying to do is one-by-one downloads...that's not a business that can grow," Ring told conference attendees during panel discussion he participated in. "It won't be healthy for the industry."
Prior to Ring's statement, Chris Stephenson, an executive in Microsoft's entertainment unit, was ballyhooing the progress made in Zune's subscription service. Zune is the digital music player that Microsoft launched in November 2006 to compete with Apple's iPod. This is also the device that saw a 54 percent decline in sales for the fourth quarter of 2008.
Ring's statement made a big impression on me. The recording industry obviously continues to work the subscription angle, which is more than 5 years old, because a better way to boost profits hasn't come along. Label honchos aren't ready to discount anything--not when the margins on 99-cent downloads are so slim.
I was under the impression that eventually the download would replace the CD as the music sector's main sales unit. I assumed that instead of packaging a dozen songs together on a disc, the labels would just be forced to sell those songs individually. That isn't what they want to do, according to Ring.
Ring made clear subscription services are not the only business model Universal Music, the largest of the four top record labels, is exploring. Universal execs will continue testing strategies until they find one, or a combination, that works.
What strategies show promise? Panel members discussed some well-worn ideas, such as bundling music fees into people's Internet-access bills. One idea tossed around was packaging music into Netflix or a similar service.
I asked the panel, which included Cory Ondrjka, a vice president at EMI's digital unit, and Michael Spiegelman, head of Yahoo Music, how much longer the sector would try to breathe life into subscriptions. Anyone can see consumers just haven't warmed to the idea of renting songs.
There isn't a single music-subscription service selling music from the top labels that generates significant revenue. Yahoo couldn't make a go of it and got out. Napster and Rhapsody, RealNetwork's subscription service, continue to appeal to niche audiences. People just don't like the idea of losing their music if they stop paying fees.
Ring never wavered. He said subscriptions work and cited Netflix and cable TV as examples. There's no arguing that the vast majority of us pay for subscriptions: magazines, cellphones, insurance, Internet access, the list is long.
The music industry, however has yet to produce a subscription plan the public finds as compelling. And what was clear after listening to the panel is that nobody in the sector is ready to give up trying.
Music industry insiders are buzzing about the press gathering Apple is hosting on Tuesday. The invitation shows a dancing man wearing an iPod and the slogan shouts, "Let's Rock."
Sure, this suggests that Apple is gearing up for a music announcement. The trouble is, nobody in music appears to know anything about it. My sources say that they don't expect Apple to announce anything to do with music content, and they are sure Apple won't be rolling out an iTunes music subscription service.
Such a service has been rumored for some time but Apple still only has licenses with the major labels to offer digital downloads, sources said.
This means of course that the rumor skittering around about iTunes offering a social-networking service similar to iMeem or Last.fm may be bunk as well. Apple would have had to cut licensing deals for things like free streaming music and this hasn't happened either.
Most people that I talked to connected with digital music are guessing that Apple's announcement will focus on iPods. But again, they don't know for sure.
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