Subscription Music Services Heat Up

Most likely, you've never even heard of the Web's two best legal subscription-music services.

By Eric Hellweg

April 16, 2003

The humble jukebox has been a mainstay of soda shops, pizza parlors, and pubs since the 1950s. Yet creation of an online equivalent of the jukebox-one that elicits the same sentimental and lucrative appreciation as its coin-operated predecessor-has thus far proven a nearly impossible endeavor.

It's not for lack of trying. Scores of Internet services offer a subscription-based mix of streaming, downloads, and CD burning. Each of the five major record labels is involved in at least one of the efforts, and dozens of independent labels have licensed their catalogs as well. But much to the industry's horror, only the illicit services are resonating with consumers.

Various analyses of the half-dozen or so services put the total of their combined subscribers at between 300,000 and 500,000. Emusic, the one legitimate music service that discloses its subscriber numbers, claimed 70,000 subscribers as of year-end 2002. Meanwhile, Kazaa, the leader of the file-trading services not sanctioned by the music industry, has been downloaded more than 200 million times.

Technology Battles

At the South by Southwest Conference-the annual gathering of the music industry, held in in March-bands, beer, and barbecue were in abundance. But discussions on digital music were not. Only one panel of the dozens presented during the four-day confab in Austin, TX, had anything to do with the Internet and music. Also gone were the several dot-com sponsors from years past.

It seems that with the dissipation of the dot-com buzz and the absence of 50 or more Internet companies pitching their visions of the digital-music future, the music industry has united to rally behind the paid-subscription services offered by the major labels. None of these services can match the catalog or-to state the obvious-the pricing of the illicit choices. That said, most of the services are moving very slowly in the right direction. And within the category of "legitimate subscription services," there are a couple that are actually pretty good deals right now.

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Back in 1997 when the digital-music space started to heat up, the battle focused on technology standards, and three main players were fighting for dominance. The first, MP3 (perhaps you've heard of it?), was created by the Fraunhofer Institute in Germany. Its advantages were small compression and flexibility. Users could add security features if they wanted, increase the bit rate, and so forth. The second, Advanced Audio Coding, created by AT&T Labs, offered the highest sound quality. The last, Liquid Audio's eponymous technology, touted itself as the most industry-friendly service, coming as it did with advanced features for security and digital rights management.

Ironically, the standard with the lowest audio fidelity-MP3-won. MP3 had the advantage of longevity in the marketplace. Furthermore, it was free, and it was not tied up with security measures. Neither of today's primary major-label-backed services, Pressplay and MusicNet, offers music in MP3 format.