Industry Analysts Ponder Sony's Music Store

[Jason Dunn]

http://www.technewsworld.com/story/33664.html

"Stand-alone software, which can be downloaded for free from the site, is needed to purchase tunes from the e-store. That could be a turn-off for consumers, according to Jarad Carleton, an IT industry analyst with Frost & Sullivan in Palo Alto, California. "Downloading software to order items from a store is a barrier for any company because, after a while, consumers get tired of having to download different software from different sites," he told TechNewsWorld.

Carleton said he finds Sony's move puzzling. "Now we have numerous companies in the legal music download business from Amazon (Nasdaq: AMZN) to Walmart to MusicMatch to Napster," he said via e-mail, 'I have to say that I don't see the value proposition for creating yet another place to purchase music -- other than those titles that Sony sells from its own site that have been published by its own label are going to have a higher profit margin than if they were sold via a third party music download store.' "

Looks like we're in for some ugly times as consumers. I think what we'll see happy is a proliferation of online music stores, likely a dozen or so before the end of the year, most will survive through 2006, but by 2007 we'll see mergers/acquisitions of collections. By 2008 there will only be a couple of online music stores because the market will have demanded that things are made simple, and hopefully by then the DRM will be tied to people, not to hardware. Studios like Sony will realize that they're better off renting their catalogue to a consumer music sales company, and leave it at that - and other music studios will follow suit. And there you have my predictions for the future. ;-)

[Jason Dunn]

http://www.technewsworld.com/story/33664.html

"Stand-alone software, which can be downloaded for free from the site, is needed to purchase tunes from the e-store. That could be a turn-off for consumers, according to Jarad Carleton, an IT industry analyst with Frost & Sullivan in Palo Alto, California. "Downloading software to order items from a store is a barrier for any company because, after a while, consumers get tired of having to download different software from different sites," he told TechNewsWorld.

Carleton said he finds Sony's move puzzling. "Now we have numerous companies in the legal music download business from Amazon (Nasdaq: AMZN) to Walmart to MusicMatch to Napster," he said via e-mail, 'I have to say that I don't see the value proposition for creating yet another place to purchase music -- other than those titles that Sony sells from its own site that have been published by its own label are going to have a higher profit margin than if they were sold via a third party music download store.' "

Looks like we're in for some ugly times as consumers. I think what we'll see happy is a proliferation of online music stores, likely a dozen or so before the end of the year, most will survive through 2006, but by 2007 we'll see mergers/acquisitions of collections. By 2008 there will only be a couple of online music stores because the market will have demanded that things are made simple, and hopefully by then the DRM will be tied to people, not to hardware. Studios like Sony will realize that they're better off renting their catalogue to a consumer music sales company, and leave it at that - and other music studios will follow suit. And there you have my predictions for the future. ;-)

[Suhit Gupta]

Wow, do you really think there will be only a couple of stores left? I feel like it will be just the other way around because there will be several different online stores (each with their own software). Look at online retail stores now. I can see that there might be a few common interfaces, similar to what Yahoo and Amazon are doing now.

Suhit

[Zack Mahdavi]

Originally Posted by Suhit Gupta

Wow, do you really think there will be only a couple of stores left? I feel like it will be just the other way around because there will be several different online stores (each with their own software). Look at online retail stores now. I can see that there might be a few common interfaces, similar to what Yahoo and Amazon are doing now.

You may be right, but the thing with the retail stores is that you're not stuck with them after you purchase a CD. With the new online music stores, you have to deal with their DRM as long as you own that song. So in a sense, you're always pinned to them.

I think a better analogy would be comparing the online music services to the portal wars of the late 90s. In 1996 or so, we had a ton of portals, including Infoseek, Yahoo, Excite, Lycos, Altavista, Snap, and others. Then, some got bought out (Infoseek by Disney), others died, like Snap and Excite, and others are just barely surviving (like Lycos and Altavista). The true king of portals now is Yahoo, but even they're battling it away with a site that's not even a portal, Google.

This has all happened over a span of 8 years... so I'd have to agree with Jason. We'll be stuck with a couple REALLY BIG ones in the end.

[Suhit Gupta]

I guess time will tell :? .

Suhit

[Philip Colmer]

If you own a MiniDisc player or another ATRAC device, you will probably welcome Sony's site launch because, as the TechNewsWorld article points out, Apple's site is specifically AAC and most of the others are specifically WMA. Whilst you could, in theory, convert from either of those formats to ATRAC, you will lose some quality because they are already in a lossy format.

We aren't going to see one format win - I don't think it would necessarily be a good thing if we did - just look at all of the arguments going on about whether or not Microsoft is good because it is a monopoly. What would be a good thing would be for a single store to offer a song in multiple formats. I don't think anyone is currently offering that as an option.

--Philip

[Zack Mahdavi]

Originally Posted by Philip Colmer

What would be a good thing would be for a single store to offer a song in multiple formats. I don't think anyone is currently offering that as an option.

I think that's not the biggest issue. The biggest problem is getting the other companies to license their DRM technology to you. We can't have Orange Computer offer AAC's without Apple's Fairplay DRM, nor can Orange offer ATRAC's without licensing Sony's DRM.

I think once these companies start licensing out their DRM, then we'll see music stores offer multiple formats. Till then, you're stuck mostly with the store that's compatible with the device you own... :?

No more iTunes for me! Half.com only..

[Felix Torres]

The problem is that of the existing music formats used by online music stores and playback devices; WMA, AAC, and ATRAC, the only one designed expressly and *solely* for purpose of universal music distribution is WMA.

AAC exists to sell iPODs.
ATRAC exists to sell SONY gadgets and Memory Sticks.
Apple won't license Fairplay.
SONY *will* license ATRAC but nobody wants it.

At this point, the only format that has robust, workable DRM, and has broad support among multiple music vendors *and* multiple hardware vendors is WMA. Conceivaby OGG and MP3Pro could get there, except its awful late in the game to start lining up partners. Online vendors need to be in business by this fall at the latest.

So you either get a framented market well into the future or the universal format is WMA.

Pick your poison Socrates.

[bdegroodt]

I think the music companies better get with it...fast. I just read this bit about the big 5 "forcing" Apple to raise prices on their ITMS. It's such BS! Just a couple of months ago, the record companies were crying the blues about how they were going to go out of business. They lower prices on CDs, but then reverse 60 days later and raise the prices...not to the old prices, but even higher. Then they play evil monopoly against Apple and force them to raise the price on something they already get almost 3/4 of the sale from in the first place.

Since ITMS came out I haven't stolen a single song. But if the record companies force my hand, I'm heading right back to my old ways. And that doesn't involve a single music store at all. DRM isn't the fix. It's a patch...and a poorly thought out one at that.

[Jason Dunn]

Originally Posted by bdegroodt

Since ITMS came out I haven't stolen a single song. But if the record companies force my hand, I'm heading right back to my old ways. And that doesn't involve a single music store at all. DRM isn't the fix. It's a patch...and a poorly thought out one at that.

I'm with you on that. Slightly different scenario for me: when I hear a song on the radio or TV that I want, I immediately go to www.puretracks.com to buy it...and when I can't find it that frustrates the hell out of me. I have money to spend, but where's the music? :roll: