Houston Calling

Digital Downloads

August 19th, 2003 · No Comments

Yesterday, I was talking with a guy at work about Houston record stores. Turns out, his son-in-law runs one of the major independent shops in town. A pretty famous one–at least as far as Texas music is concerned.

Anyway, he mentioned how the floods of Tropical Storm Allison and computer programs like Napster and Kazaa have substantially affected the retail music business. We started talking about how record stores will have to adapt to compete with online music stores like Apple’s iTunes Music Store.

I mentioned that I thought it would be a good idea for record stores to have various formats of songs available for download in-store. For instance, if I wanted to take my iPOD to a store and buy a few singles, then all I would have to do is plug into a system and pick the songs I wanted. I am not sure how practical of an idea it is, but it seems an interesting concept.

Then I just came across this in today’s paper:

From the Associated Press:

RealNetworks Inc. and electronics retailer Best Buy announced a deal today in which customers can try out and sign up for RealNetworks’ online music service at Best Buy’s 560 stores across the country.

The agreement, which unites traditional sales with the fledgling Internet business of digital music, boosts competition among companies racing to distinguish themselves in the market for legally downloading songs and albums over the Internet.

RealNetworks has been aggressively making deals with high-speed Internet service companies to drive customers to its Rhapsody digital music subscription service, which it acquired in its recent purchase of San Francisco-based Listen.com. More are to come, said Dan Sheeran, RealNetworks’ senior vice president of marketing.

With Rhapsody — including the new Best Buy Rhapsody service — customers pay a $9.95 monthly fee to listen to songs from a vast library of music from the major record labels as well as independent producers. Rhapsody subscribers can also burn songs onto compact discs for 79 cents each.

The service is one of several to emerge in recent months. Apple Computer launched its iTunes Music Store in April, offering digital downloads of music for 99 cents a song. Microsoft Corp. last week teamed with a British company to offer a European service selling songs over the Internet for 99 euro cents (about $1.12) each through Microsoft’s MSN Music Club or Tiscali Music Club, depending on the country.

The deal with Minneapolis-based Best Buy — in which the two companies will share revenue from subscribers — will help RealNetworks spread from its base of technology-savvy customers to a mainstream audience, Sheeran said.

He added that RealNetworks plans to offer a service by the end of the year that lets customers burn songs onto CDs without having to be a monthly subscriber.

Although he would not disclose other possible partners for the service, he said it is “the type of thing that e-retailers are interested in.”

Companies have been increasingly casting about for legal ways to sell songs over the Internet that do not handcuff consumers’ use of the music, but that also respect record labels’ copyright concerns. Besides Apple and Microsoft, Seattle-based Internet retailer Amazon.com has also said it is interested in selling digital music, once it determines the best way to offer songs over the Internet.

The deal is good for both companies, letting them “tie the online and offline worlds of consumers,” said Michael McGuire, an analyst with Gartner G2. “The more information like that you have, the better you are in the long term.”

FYI: I also saw online today that the Rolling Stones’ catalog is to be made available for digital distribution for the first time. For a two-week exclusive period, the Rhapsody online subscription service and Best Buy will offer the entire post-1971 Rolling Stones catalog as part of a deal with Virgin/EMI, and the pre-1971 Stones material in an agreement with ABKCO. At the end of the exclusive period on Aug. 31, the EMI material will be made available for download through all legitimate services, including Apple’s iTunes Music Store and MusicNet.


The article went on to say:

The Stones, one of the last superstar acts to offer its music online, “realized the time was right and that this was a good opportunity that also tied in with physical retail,” says Ted Cohen, EMI senior VP of digital development and distribution. “The tie-in with Best Buy will give people confidence to buy music online, because they’re getting music from people they are already used to buying from.”

RealNetworks VP of music Sean Ryan says Rhapsody had been in discussions with EMI and ABKCO for more than a year to secure the catalogs. The companies had also been in talks to create a Rhapsody/Best Buy brand. “The Stones deal is just part of a bigger ongoing relationship between us and Best Buy,” he says. “This is the mainstreaming of digital services.” (from Billboard.com)

It will be great to see how this all plays out. I loved hearing a guy the other day tell me that he was considering buying a CD changer for his car until I told him about the iPOD and how you can listen to MP3 players via the car stereo or standard cassette deck. Why spend hundreds of dollars for CD player when a portable MP3 player makes more sense?

Now Playing in My iPOD: MYTWILIGHTPILOT555

Tags: Music