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January 19, 2006 4:00 AM PST

Digital music spins new sales approach

Despite the millions of dollars that record labels spend on advertising, it may be folks like Robert Burke who determine the future of music marketing.

Burke, a South Carolina software tester, operates a popular series of Web sites called Scopecreep.com, where he's posted thousands of digital music playlists, from "Best songs of 1989" to "Palindrome songs," that can be played by any Yahoo or RealNetworks Rhapsody music service subscriber.

On one level, this is little different than the age-old practice of making mixed music cassette tapes for a friend. But as online music retailers look for ways to guide listeners through catalogs of millions of songs, this latter-day mix-making is drawing renewed attention, particularly from subscription services that see people like Burke as key allies in their fight against Apple Computer's popular iTunes.

Last week, Yahoo announced it had hired the creator of Webjay, a site for posting playlists. Yahoo is getting in on what could be a major part of the online music business: A recent joint study from Harvard University and the Gartner Group predicted that by 2010, 25 percent of online music sales will be sparked by consumers recommending songs to one another.

"We fit in between traditional media and word of mouth media," Burke said, explaining the appeal of sites like his. "We're that in-between world that's the best of both worlds."

To date, the playlist-swapping boomlet represented by Burke, the newly Yahoo-owned Webjay and others has been more of a grassroots phenomenon than an effective weapon in the digital music wars. But ambitious subscription music services see music-sharing tools playing an important role in their futures.

A key feature of subscription services is that they give their users the ability to listen to unlimited amounts of music. As long as two people trading song recommendations have both paid the service's subscription fee, they can legally listen to thousands of songs, or swap dozens of playlists without any additional fee.

"The people who get this are those who are more engaged," said Evan Krasts, director of product management for RealNetworks' Rhapsody service. "If you've got someone who understands what this is about, you're going to get someone who's going to be a good customer."

iTunes itself is also a haven for playlist makers. Indeed, its iMix section, with more than 330,000 playlists contributed by individuals, is one of the biggest repositories of music recommendations online.

But at 99 cents per song, a 10-song iTunes playlist costs $10 to download, which limits the amount of songs that people can actually listen to, subscription service executives say.

Still, that argument hasn't exactly triggered a mass rush to subscription services. Carried on the back of the phenomenal success of the iPod, Apple's iTunes remains far and away the most dominant force in the digital music business. Apple executives have said that consumers want to own their music, rather than "rent" it through subscription services.

CONTINUED: Promotion is key...
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Add a Comment (Log in or register) 56 comments (Showing first 20 comments)
Subscriptions will never work...Lots of DRM and too much confusion
by bobby_brady January 19, 2006 7:34 AM PST
When I think of iTunes, I know all music is 99cents, when I think of subscriptions, I never know what the rate is, although I know that most subscriptions expect consumers to shell out over $180 a year. I can never figure out what I can do with the music. Can I burn it on a CD? Can I transfer it to a MP3 player? Too much hassle to rent.

Subscriptions will never work out.
Reply to this comment View all 3 replies
Subscriptions will never work...Lots of DRM and too much confusion
by bobby_brady January 19, 2006 7:34 AM PST
When I think of iTunes, I know all music is 99cents, when I think of subscriptions, I never know what the rate is, although I know that most subscriptions expect consumers to shell out over $180 a year. I can never figure out what I can do with the music. Can I burn it on a CD? Can I transfer it to a MP3 player? Too much hassle to rent.

Subscriptions will never work out.
Reply to this comment View all 3 replies
What about Weed?
by GRobLewis January 19, 2006 9:26 AM PST
The service from weedshare.com would seem to offer the best of all
worlds. No subscription fees: people "own" their music, yet can
listen to complete songs 3 times before deciding to buy. And when
they buy, the recommender gets a commission for helping to
spread the music. In fact, if you want to start your own on-line
music store, just buy some Weed files and post them to your web
page, blog, MySpace, whatever. Also, weedshare has the pricing
flexibility that iTunes doesn't.
Reply to this comment
What about Weed?
by GRobLewis January 19, 2006 9:26 AM PST
The service from weedshare.com would seem to offer the best of all
worlds. No subscription fees: people "own" their music, yet can
listen to complete songs 3 times before deciding to buy. And when
they buy, the recommender gets a commission for helping to
spread the music. In fact, if you want to start your own on-line
music store, just buy some Weed files and post them to your web
page, blog, MySpace, whatever. Also, weedshare has the pricing
flexibility that iTunes doesn't.
Reply to this comment
The long term problem...
by C.Schroeder January 19, 2006 9:29 AM PST
with subscription services is that either your musical tastes must be short term (i.e. flavor of the month or year) or you are willing to believe that once a tune enters the "celestial jukebox" it will never leave.

I don't trust the music publishers to keep a tune available in the "celestial jukebox" for my entire lifetime. I expect that some years down the road either these services or the music publishers will start to pull tunes with low listening statistics. The reality is that even though storage is cheap and slowly getting cheaper, there will likely still be a tipping point for the cost of maintaining the "celestial jukebox."

I will continue to buy my music, thank you, and in a format that preserves my right of first sale.
Reply to this comment
The long term problem...
by C.Schroeder January 19, 2006 9:29 AM PST
with subscription services is that either your musical tastes must be short term (i.e. flavor of the month or year) or you are willing to believe that once a tune enters the "celestial jukebox" it will never leave.

I don't trust the music publishers to keep a tune available in the "celestial jukebox" for my entire lifetime. I expect that some years down the road either these services or the music publishers will start to pull tunes with low listening statistics. The reality is that even though storage is cheap and slowly getting cheaper, there will likely still be a tipping point for the cost of maintaining the "celestial jukebox."

I will continue to buy my music, thank you, and in a format that preserves my right of first sale.
Reply to this comment
Huh
by tinyelvis January 19, 2006 1:08 PM PST
You do not have to give up your music collection when you join a subscription service. You CAN do both.

I don't for the life of me, understand why the two models are pitted against each other like they are mutually exclusive?

How do you discover the music you want to purchase?

Radio? lame
MTV - lamer
blogs - better, but incomplete

Why not take all the latest releases for a test spin and see if they are worth buying.

We are talking about less than $10 a month here people. Less than one CD a month. If you subscribe to a music magazine, cancel now and get a Yahoo or Rhapsody subscription. You'll thank me.
Reply to this comment
Huh
by tinyelvis January 19, 2006 1:08 PM PST
You do not have to give up your music collection when you join a subscription service. You CAN do both.

I don't for the life of me, understand why the two models are pitted against each other like they are mutually exclusive?

How do you discover the music you want to purchase?

Radio? lame
MTV - lamer
blogs - better, but incomplete

Why not take all the latest releases for a test spin and see if they are worth buying.

We are talking about less than $10 a month here people. Less than one CD a month. If you subscribe to a music magazine, cancel now and get a Yahoo or Rhapsody subscription. You'll thank me.
Reply to this comment
Subscriptions & Playlists are not consumer oriented
by cagerattler January 19, 2006 4:21 PM PST
Subscriptions and Playlists are a good idea, but not for the consumer market. Let Apple have the consumer market, okay?

You folks with subscription services and playlists need to target another area. See who Muzak targets, and go there. Do you feel that little spark of opportunity? Right. Now go forth and pump your subscription music into every elevator, every dentist office and shopping mall across America.

Do you get it now? Good. Just send me my 20%.
Reply to this comment
Subscriptions & Playlists are not consumer oriented
by cagerattler January 19, 2006 4:21 PM PST
Subscriptions and Playlists are a good idea, but not for the consumer market. Let Apple have the consumer market, okay?

You folks with subscription services and playlists need to target another area. See who Muzak targets, and go there. Do you feel that little spark of opportunity? Right. Now go forth and pump your subscription music into every elevator, every dentist office and shopping mall across America.

Do you get it now? Good. Just send me my 20%.
Reply to this comment
Subscriptions & Playlists are not consumer oriented
by cagerattler January 19, 2006 4:53 PM PST
Subscriptions and Playlists are a good idea, just not for the consumer market. Let Apple have the consumer market, okay?

Those offering subscription services and playlists need to go after another area. See who Muzak targets and go there. Feel that spark of opportunity? Right. Now go forth and fill every elevator, dentist office and shopping mall with your subscription music service.

Now do you get it? Good. Just send me my 20%.

(originally posted earlier, but was removed, hmmm.)
Reply to this comment
Subscriptions & Playlists are not consumer oriented
by cagerattler January 19, 2006 4:53 PM PST
Subscriptions and Playlists are a good idea, just not for the consumer market. Let Apple have the consumer market, okay?

Those offering subscription services and playlists need to go after another area. See who Muzak targets and go there. Feel that spark of opportunity? Right. Now go forth and fill every elevator, dentist office and shopping mall with your subscription music service.

Now do you get it? Good. Just send me my 20%.

(originally posted earlier, but was removed, hmmm.)
Reply to this comment
Stiff Neck Apple Zealots
by tinyelvis January 19, 2006 6:21 PM PST
What is it with you stiff neck Apple Zealots and your anti-subscription diatribes?

Subs continue to grow and there is room for everyone. Show me a iTuner and a subscription customer and I'll show you the person more knowledgable about music. And he won't be the one with an iPod.
Reply to this comment View all 2 replies
Stiff Neck Apple Zealots
by tinyelvis January 19, 2006 6:21 PM PST
What is it with you stiff neck Apple Zealots and your anti-subscription diatribes?

Subs continue to grow and there is room for everyone. Show me a iTuner and a subscription customer and I'll show you the person more knowledgable about music. And he won't be the one with an iPod.
Reply to this comment View all 2 replies
Satellite Radio/ Wifi/ipod combined
by snertagert January 19, 2006 6:55 PM PST
I thought I wouldn't go for a subscription till XM Satellite Radio landed in my lap. I always figured it would be strange paying for a service when I could go out and get a CD that I owned for the same price. However, having everything and anything you would ever want is definitely worth it. I think the ulitmate subscription would be to some how have a wi-fi service were DJ's would mix for you but also have on demand for when you wanted to listen to specific tunes. Mkae it nation wide and I'm there.
Reply to this comment
Satellite Radio/ Wifi/ipod combined
by snertagert January 19, 2006 6:55 PM PST
I thought I wouldn't go for a subscription till XM Satellite Radio landed in my lap. I always figured it would be strange paying for a service when I could go out and get a CD that I owned for the same price. However, having everything and anything you would ever want is definitely worth it. I think the ulitmate subscription would be to some how have a wi-fi service were DJ's would mix for you but also have on demand for when you wanted to listen to specific tunes. Mkae it nation wide and I'm there.
Reply to this comment
Common Sense
by tinyelvis January 20, 2006 10:10 PM PST
It's common sense. Like I said it's all about economics, volume and time.

Maybe that's a hard concept for you to understand, so let me make it easier.

1. Economics. I can listen to any of over a million songs for 10 bucks a month. The cost of downloads / CDs prohibits you from LISTENING to the amount of music I can. Subscribers can listen to a more diverse selection then you could ever dream of with iTunes or physical media. Even with a budget of $500 a week you will not have scratched the surface of what a subscriber has at their fingertips.

2. Volume. Even if you could afford to buy a library that equals that of a music subscription service customer, where will you put the data? Do you have the hard drive space? Can iTunes handle it? Nope. And if your hard drive ever crashes you're out of luck. My million+ songs can be accessed from any Internet connected computer on the planet. You can carry at max of what, 60 gigs?

3. Time. While you download, transfer and maintain your files I am listening to music. It's all done for me. Also, if I read a great review of a brand new album by a critic I respect, I can search for it and be listening to the full album in a matter of seconds. Then I can make a determination on whether to buy it. You can listen to :30 clips. Lame. When I buy a CD I am 100% certain that it's something I love.

This brings me to another point against your ignorant and irrational point of view. People who use subs also buy CDs and pay for downloads. We are just much better informed customers. Would you buy a suit without trying it on or a car without driving it? Why buy music you are not familiar with?

Simple no?
Reply to this comment View reply
Common Sense
by tinyelvis January 20, 2006 10:10 PM PST
It's common sense. Like I said it's all about economics, volume and time.

Maybe that's a hard concept for you to understand, so let me make it easier.

1. Economics. I can listen to any of over a million songs for 10 bucks a month. The cost of downloads / CDs prohibits you from LISTENING to the amount of music I can. Subscribers can listen to a more diverse selection then you could ever dream of with iTunes or physical media. Even with a budget of $500 a week you will not have scratched the surface of what a subscriber has at their fingertips.

2. Volume. Even if you could afford to buy a library that equals that of a music subscription service customer, where will you put the data? Do you have the hard drive space? Can iTunes handle it? Nope. And if your hard drive ever crashes you're out of luck. My million+ songs can be accessed from any Internet connected computer on the planet. You can carry at max of what, 60 gigs?

3. Time. While you download, transfer and maintain your files I am listening to music. It's all done for me. Also, if I read a great review of a brand new album by a critic I respect, I can search for it and be listening to the full album in a matter of seconds. Then I can make a determination on whether to buy it. You can listen to :30 clips. Lame. When I buy a CD I am 100% certain that it's something I love.

This brings me to another point against your ignorant and irrational point of view. People who use subs also buy CDs and pay for downloads. We are just much better informed customers. Would you buy a suit without trying it on or a car without driving it? Why buy music you are not familiar with?

Simple no?
Reply to this comment View reply
You're hopeless
by tinyelvis January 21, 2006 4:46 PM PST
You're hopeless.

Subscriber growth is excellent.

I suppose by your logic Ashley Simpson is the best musician in the nation since she is currently selling the most?

Get a clue sheep. baaa
Reply to this comment View reply
You're hopeless
by tinyelvis January 21, 2006 4:46 PM PST
You're hopeless.

Subscriber growth is excellent.

I suppose by your logic Ashley Simpson is the best musician in the nation since she is currently selling the most?

Get a clue sheep. baaa
Reply to this comment View reply
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