Download What?

According to a column in the USA today, the music download business is yet to take off. In the article Kevin Maney goes as far as to calling it a failure. He is talking to both purchase models like Apple's iTunes Store or rental models like Yahoo music and Rhapsody. The idea is that none of these business have really taken off. I am not sure what Kevin Maney would call a success but Steve Jobs admits that a low percentage of songs on iPods are bought off iTunes

Some have argued that once a consumer purchases a body of music from one of the proprietary music stores, they are forever locked into only using music players from that one company. Or, if they buy a specific player, they are locked into buying music only from that company’s music store. Is this true? Let’s look at the data for iPods and the iTunes store – they are the industry’s most popular products and we have accurate data for them. Through the end of 2006, customers purchased a total of 90 million iPods and 2 billion songs from the iTunes store. On average, that’s 22 songs purchased from the iTunes store for each iPod ever sold.

Today’s most popular iPod holds 1000 songs, and research tells us that the average iPod is nearly full. This means that only 22 out of 1000 songs, or under 3% of the music on the average iPod, is purchased from the iTunes store and protected with a DRM. The remaining 97% of the music is unprotected and playable on any player that can play the open formats. It’s hard to believe that just 3% of the music on the average iPod is enough to lock users into buying only iPods in the future. And since 97% of the music on the average iPod was not purchased from the iTunes store, iPod users are clearly not locked into the iTunes store to acquire their music.

One of the first big problems here is that the CD has yet to die. When the iTunes Music store launched in 2004 I did not expect to be buying non protected CDs in 2007. Part of that is that all the CD protection schemes have sucked. The worst of all was the Sony BMG XCP. That was so bad that companies might have scurried away from DRM CDs in fear forever.

I think iPods have become so big that most the people I know will not buy CDs that they cannot rip to iTunes. Everyone wants MP3 so they can take their music with them. I would return any CD I could not Rip.

For my friends who do not use iTunes, they usually give me three reasons. DRM is the first reason. Everyone knows that iTunes DRM is easy to beat. All you need to do is burn it to a CD and Rip it again. This is still too much of a hassle. We want it without any DRM. They would also like it better if it was MP3

The second reason is because of the Backup policy. If you buy a song from iTunes and lose it, you have to buy it again. That really sucks. This is an electronic world. If I am really buying the music license I should be able to re-download the song.

The third and maybe more important is the quality of the music. AAC, the iTunes music format, is not a lossless format. For me the discount is not deep enough for me to buy the music in a lossy format. If it is an album I am excited about I will buy the CD. If it is something I just want to try, I will buy it from eMusic. I only buy music from iTunes when I have a gift card.

To be honest I think it is too early to call download music service failures. If they are still in business they are not a failure yet. I know that everyone wants everything to move in internet time, but I think this is a sign that real world time still counts for something. We are still in the first generation of these services. I think that they 2.0 versions might surprise us.


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