The digital music industry is headed for a crossroads, as more stores and record labels try out DRM-free music sales, and as some of the bigger names in digital music team up to offer a new service. MTV and Real Networks announced in August that they would create a new music service based on Real's Rhapsody service and MTV's music content and packaging. Verizon will deliver portions of the service through its V Cast music offering. Verizon will eventually allow for tunes purchased through V Cast to be accessible through a Rhapsody account and for transfer of music from a Rhapsody account to a mobile phone.
Meanwhile, Rhapsody and Wal-Mart began selling DRM-free selections from Universal's music catalog, and Real Networks CEO Rob Glaser believes that 2008 will be the year DRM-free goes mainstream for purchased digital music. Recently, Apple debuted a new iTunes Wi-Fi Music Store that lets iPod Touch and iPhone owners purchase songs directly on their devices. The devices will also enjoy free Wi-Fi access at Starbucks locations in 2008.
More on the Amazon MP3 Store
So why Amazon is even bothering with a music download store, given that “everyone knows” the iTunes Store is a loss-leader that Apple offers just to sell more iPods? Because that’s bullshit. Apple is making good money from the iTunes Store. So, ballpark-estimate-wise, it’s safe to say Apple gets about 30 cents per song sold — and even more for songs sold in euros, given its current strength against the dollar. On July 31, Apple announced that they’d sold the three-billionth song from the iTunes Store. Three billion songs times $.30 per song is $900 million.
A nd, iTunes Store music sales are growing — fast. Apple announced the two-billionth song sold just six months earlier. Even if the acceleration stops, which it won’t soon, Apple is already selling two billion songs per year, for $600 million in revenue.
Like Amazon's DRM-Free Music Downloads? Thank Apple
Edgar Bronfman, Jr., the Warner Music Group chairman, told Goldman Sachs investors in New York last week he was considering removing DRM from Warner's music downloads -- this just months after suggesting Warner would never abandon DRM. He blamed Apple for the apparent change of heart.
"We need some online competition" for Apple's iTunes Music Store, Bronfman said.
He conceded the iPod is "the default device" and iTunes the "download
model."
The self-created headache for the industry is that the highly popular iPod and new iPhone only play music protected by Apple's proprietary FairPlay DRM solution or music that isn't protected at all. And Apple chairman Steve Jobs has repeatedly balked at licensing FairPlay for use on competing download services or devices. That meant music companies had to choose between using iTunes or going DRM-free. The industry stood by and allowed most of its music-download sales to come from Apple. Recognizing opportunities lost to Apple's dominance, the music industry is moving toward throwing DRM overboard in a bid to open up new retail markets and promotional opportunities.
Making P2P pay: Grooveshark review
Grooveshark is a radical new service that attempts to fuse community services and P2P music file sharing with a product that will motivate users to share music files and simultaneously accrue credits towards music purchases from the process. Subscribing to Grooveshark turns your own personal library of music into a music store available to family, friends and any other passing consumers that you can draw in. The service is an ambitious attempt to commercialize a P2P distribution with social networking model of distribution.
Grooveshark requires the user to download a Java app that interfaces between the Web service and your library of tunes. The site operates like a music laundering service, no questions are asked as to where the tracks came from, but when one of your contacts chooses to download the track from your computer, Grooveshark will bill your contact for the full cost of the track and then pay a share of the money to the label and credit a portion to your account against future purchases.
Wal-Mart studies environmental impact of DVD distribution
Wal-Mart is partnering with the Carbon Disclosure Project on a pilot program that will study the amount of energy used to bring products including DVDs to its store shelves. The nation’s No. 1 retailer of DVDs, Wal-Mart is examining procurement, manufacturing and distribution processes with the goal of coming up with ways the retailer and its vendors can reduce harmful emissions on the environment.
Amazon's MP3s Contain Watermarks, But Not the Privacy-Invading Variety
Amazon.com's new MP3 store watermarks its MP3s, but only with information stating where the songs were purchased, not who did the purchasing, according to the online uberstore. That's the good news.
My DVD Business! It’s Melting, Melting … Melting
The salad days when you could rush dross like “Police Academy: Mission to Moscow” and “From Justin to Kelly” out of empty theaters, onto digital media and into the living rooms of those willing to actually sit through them are over. Total DVD sales are down 7% so far this year. Which is a far cry from the double-digit growth the industry enjoyed just two years ago. High-definition DVDs were supposed to offset this decline, but the silly format war between the HD DVD and Blu-ray supporters has curbed adoption of the next-generation format. Worse, according to analysts, the sparring between the two camps is likely to continue for another 18 months. Which means sales of high-definition discs likely won’t be substantial enough to improve studio revenue this year or next.
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