Technology moves at broadband speeds. But the music industry's transformation to the digital era has been trickling along at a pace suitable to that modem you tossed out when you got your high-speed connection. Apple's iTunes Music Store--which has sold more than 350 million downloads at a buck a pop--has been wildly successful. But because digitized music can be distributed, paid for and listened to in so many ways, there's room for other business models that could potentially grow the whole industry. Apple CEO Steve Jobs professes to be cautious about this issue--"We're not religious on this, but there's no evidence people want [other models]," he says--but others have been brainstorming different ways to move legal digital music forward. Now we're finally seeing some of the schemes come to market.
For instance, Real Networks has just come out with Rhapsody 25, which adds two twists to its existing subscription service. The first is that instead of being able to stream unlimited tunes from the million-song catalog, you are limited to 25 every month. Before you complain, listen to the second difference--it's free. You don't even need to register a credit card to get it. This enables users to test- drive a bunch of songs of their choice in their entirety before deciding whether to spring for the CD (as opposed to listening to those frustrating 30-second samples the industry allows digital music stores to offer). Also, you can e-mail a playlist of your own weird favorites and your friends can hear your mix, at least until the musical speedometer hits the quarter-century mark (at which point Rhapsody hopes you upgrade to the paid service).
Rhapsody also is joining its competitor Napster in allowing subscribers to download unlimited songs into their portable players, keeping them there for as long as you keep paying the monthly $15 fee. Unfortunately, only a few music players support this technology, and none is called iPod. Also, it costs 50 percent more than the usual computer-bound subscription, a price that may eventually go higher. "We see more elasticity in subscription pricing," says Napster CEO Chris Gorog. (But if prices get too elastic on the high side, consumers may go back to stealing.)
A start-up called Mercora offers a cross between Internet Webcasts and peer-to-peer file sharing called IMRadio. It allows anyone to create audio playlists or talk-show-like podcasts, which are listed on the Mercora Web site. Subscribers to the service can listen to these--or record them--for $4 a month. To stay clear of lawsuits, Mercora will keep track of the songs embedded in the broadcasts and pay the publishing and performance fees to the copyright holders.
On an even grander scale, Snocap, a company founded by Napster creator Shawn Fanning, is trying to get all the major record labels and indies (it already has Sony, Universal and EMI) to allow their songs to be logged into a giant "digital registry" that will have millions more songs than the current legal services. Snocap will then handle the licensing arrangements for "any entrepreneur who has an innovative business model," says exec Ali Aydar.
Some of these ideas may flop, but eventually the most ingenious ones will generate more excitement in music and a greater willingness to sample new artists. Best of all, music executives are starting to get this. "There's been a change in attitude," says Adam Klein, EMI's head of strategy. "We've found that the more time consumers spend with digital music, the more they spend on music overall." To those outside the music industry, this observation seems as obvious as mud. But acknowledging the obvious certainly beats denial. As the shrink said to Portnoy, "Now we can begin."