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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

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July 05, 2006

Digital Music Primer in the WSJ
by David Harrell
Digital Music Primer in the WSJ
Today's Wall Street Journal has a Digital Music Primer by Walter Mossberg and Katherine Boehret. While the subhead in the print edition describes it as "Our Guide to the Basics," I'm not sure if it clears things up that much for the uninitiated. That's not a slam on Walter's writing, which -- as always -- is clear and direct. It's just that the maze of proprietary file formats and incompatible hardware systems still seems likely to overwhelm the average consumer.

Overall, Walter still likes the iPod and iTunes a lot and doesn't seem enamored with the subscription service model:
Q: What is the difference between Apple's iTunes store, and competing services like Rhapsody and Napster 2.0? Does one carry more music?

A: Apple's iTunes store claims to have more than three million songs licensed from the major labels and from independents. Rhapsody and Napster claim more than two million songs, and Yahoo Music Unlimited claims more than one million. So, iTunes has by far the most music. In addition, iTunes has a strong selection of videos, including 150 television series, plus tens of thousands of audio books and podcasts. Its competitors are much weaker in these non-music categories. Most have nothing at all besides music.

The main difference lies in how the services work. iTunes works like a physical record store: you buy songs or albums, paying separately for each. Songs are 99 cents each, albums are usually $9.99, and videos are typically $1.99. Apple is reportedly negotiating to sell full-length movies as well.

Rhapsody, Napster and Yahoo work on a subscription model: you pay a monthly fee, and can download an unlimited number of songs. For Rhapsody and Napster, the fee is $10 a month if you want only to store and play music on a computer, or $15 a month if you also want to play your music on a portable player. Yahoo charges less -- $6.99 a month for a PC-only plan and $11.99 a month for a portable plan.

The upside of Apple's approach is that, once you buy a song, you own it. It never expires. You can burn it to CD an unlimited number of times, and transfer it to an unlimited number of iPods. The downside is that, to fill an iPod with, say, 5,000 purchased songs, you'd have to spend $5,000.

With the subscription plans, you can fill a portable player for just a monthly fee. But there's a huge downside: you don't own the music, you merely rent it. If you stop making your monthly payments, all the songs you downloaded over the years will suddenly expire and become inert and unplayable on your computer and on your portable player. Also, rental songs usually can't be burned to CD and can only be copied to a limited number of portable players. In order to burn the tunes to CD, you generally must first buy them for an individual price, just as you do on iTunes.
He also fails to include eMusic in the context of the other major players, mentioning it only as a way to purchase iPod-compatible music from a non-iTunes source:
There is one exception. A service called eMusic sells its songs in the open MP3 format, without encryption or copy-protection. Thus, these songs will play on iPods and all other portable music players. But eMusic doesn't carry the catalogs of the major labels. It has a much smaller selection than iTunes does.
Here's a link to the full article.


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