First BuyMusic.com, now MusicMatch. The online music company today said it will offer an Apple iTunes Music Store-style subscription-free service in the autumn.
Just before it did, market watcher Jupiter Research announced it had "slashed" its forecast for the revenue it expects to be generated by downloads over the next few years.
MusicMatch, which already offers a subscription-based service, the $7-a-month MusicMatch MX, said it has struck deals with nine big-name labels to offer a casual purchase-oriented download service for Windows PCs.
Among the labels are 'big five' players EMI, Universal and BMG, but both Warner and Sony are notable by their absence, which automatically puts MusicMatch's service at a disadvantage to both Apple and BuyMusic.
MusicMatch didn't reveal much in the way of details about the service, so it's going to be interesting to see if they offer the same sub-licensing terms that BuyMusic offers. BuyMusic customers don't actually purchase ownership of the tracks they download, as they would if they were buying a CD, they simply purchase the right to listen to them - much the way software licences work.
Such restrictions may limit BuyMusic's appeal, if reader responses to our original story on the company are anything to go by. In any case, the online music business isn't exactly booming, according to Jupiter.
It reckons some $80 million will be spent online on subscriptions and one-off downloads this year, just over ten per cent of the $750 million that will be spent buying CDs via the Net.
The researcher now says that come 2008, only $3.3 billion will be spent on online music, up from $830 million this year. That equates to an average annual growth rate of around 15 per cent. Come 2008, and only 26 per cent of the money Americans spend on music will pass through online channels. Jupiter doesn't say what it was predicting before.
The reasons: "competition for entertainment dollars, changing demographics, the end of the CD upgrade cycle and piracy", said Jupiter Research Senior Analyst Lee Black. Only 17 per cent of online adults say they've reduced the number of tracks acquired from Kazaa and co., Jupiter's research claims.
The bottom line is that people would rather spend their money on games and DVDs than music, particularly when the file sharing services free up cash for other forms of entertainment. The industry's efforts to block illegal file sharing will continue, but even if it experiences real success, Jupiter's analysis suggests that the closure of files sharing archives won't be accompanied by a rapid upturn in online spending.
That's as much because Apple and its successors make it possible to buy the tracks you actually want and not all that extra stuff artists fill up albums with. Why spend £15 ($24) on a 12-track album when you can preview it online then buy the four tracks you like best for less than a fiver?
Our own experience gained in culling tracks for our iPod suggests only around a third of the songs we own on CD make the grade and are transferred over to the player. We could have saved a fortune buying on a track-by-track basis rather than buying whole CDs.
That, of course, is why bands like Metallica and Radiohead - or, rather, their managers - don't like Apple's service and have refused to allow their songs to be included. It's degrading the album concept, they claim. Possibly, but it doesn't say much for the strength of the album that people really only want a handful of songs not a dozen (and - personally speaking - in the case of the new Metallica album, only one).
We wonder what terms the artists are getting for downloads, which we imagine are counted as singles, not albums and thus may yield the artist less and the label more. We remember, back in the days when the CD-ROM market was going to be bigger than anything, being told by Dire Straits' manager that unless record labels came up with a better royalty deal, his band and others wouldn't sign deals. ®