One year to the day since Apple heralded a new age of digital music distribution and a series of reports have appeared examining the new industry.
In the UK, BBC Online is offering a full history of the service's first year, in which it looks at how existing European services hope to capitalize on the so far non-appearance of iTunes Music Store or Napster in Europe. This report also states Apple to have sold 70 million songs in its first year – 30 million tracks lower than Apple CEO Steve Jobs had aimed for.
The Mercury News praises the success of Apple's iTunes Music Store, saying it has: " Transformed Apple from a boutique player in the computer world to a company whose iPod music player is at the centre of the digital entertainment revolution".
This report praises Apple for delivering a service that offered the ease of use and digital rights consumers actually want. And praises Apple CEO Steve Jobs for his stature as a business leader, personal conviction and commitment to the plan, which opened the flood gates for other service providers with its success.
It's still a nascent industry, the report says, citing EMI vice chairman David Munns, who said: "The numbers aren't huge. It's not turned our fortunes around, from a profit sense, overnight. But it's given the industry confidence that there is a future.''
Format warfare slows industry growth Apple's determination that it won't license its FairPlay digital rights protection mechanism to other vendors does attract criticism. Music industry executives see this decision as "potentially inhibiting the market's growth," the report observes.
Other moves are in the air, for example the appearance of rare and deleted tracks through such services. Larry Kenswil, president of Universal Music's eLabs told the Mercury News his label will soon begin distributing "huge" amounts of Indian and Asian music online. Until now, fans of those genres have had to import such music. "We see a major upside here," he said.
Subscriptions, online music's second wave? TechNewsWorld is looking forward at the battle for market share between rival music services that it expects to see intensify this year. It contrasts Apple's a la carte (single track) download service with the subscription-based services – in which consumers lease access to large music collections – that are appearing from some vendors, including MusicMatch and Napster 2.0.
Subscription service proponents believe such services will eventually dethrone Apple from its position as the world's leading online digital music service, offering users guaranteed high-quality music downloads, which many consumers prefer to the questionable quality available through file sharing networks.
Frost and Sullivan analyst Jarad Carleton said: "For people who want a good listening experience, something like that is important."
Napster president Brad Duea insists subscription services will win through: "I foresee every online home having at least one music subscription in future," he said. However, all involved agree that selling such services to consumers is a struggle, as they are used to owning, not leasing, the things they buy.
Money is not evil, but love for it is The excitement surrounding new digital music distribution services may be reduced if certain elements of the music industry have their way, this report warns.
Music industry insiders report that the labels are considering raising prices above the 99 cents sweet spot. Carleton condemned such plans: "It's crazy, and it's highway robbery. They have no packaging costs, no distribution costs, all they have is a fixed infrastructure cost. I think the record executives are being greedy".
The LA Times (free registration required) offers a two-sided look at the success of digital music in the US, explaining: "The online music industry is selling songs by the millions – and that may not bode well for the major record labels".
Singles market no cash-cow It looks at the rapid sales growth of online music services: "They threaten to remix the recording industry's traditional revenue streams, pumping up the volume of singles and subscriptions and turning down album sales."
Online consumers buy ten times as many singles as albums, while offline consumers buy 50 times more albums than singles, the report claims. this worries some music industry insiders, who say: "There's no money to be made on singles."
The LA Times writes: "Dexter Holland, lead singer for the Offspring, said online singles might cut both ways for musicians but would definitely rock industry economics".
Analysts estimate that online music revenues will climb from $65 million in 2003 to $250 million in 2004.