Internet Brands Leave Music Services to Experts

INTERNET BRANDS LEAVE MUSIC SERVICES TO EXPERTS
[SOURCE: Reuters, AUTHOR: Antony Bruno]
Veterans of the subscription service field say a successful music subscription business needs at least 1 million subscribers in order to reach critical mass and become self-sustaining, although one can be profitable with lower numbers. To date, the only company to achieve that milestone is RealNetworks' Rhapsody. Assuming it can retain most of the subscribers it acquired from AOL and Virgin, Napster will not be far behind, at around 900,000 subscribers. Meanwhile, household names like Yahoo and MTV are not even close. Neither company has disclosed subscriber figures, but analysts estimate they lag far behind. AOL Music Now had just 350,000 subscribers when it handed the service over to Napster -- 100,000 less than when it acquired Music Now in November 2005. The complex market is defined by technology, device and supply problems far out of their control. The technology governing the transfer of subscription tracks to portable devices still has problems. None of the services work with the popular iPod; the few devices that are compatible are unoriginal clones that have not sold well; and the monthly music licensing fees are a constant drain on already thin resources. And to cap it all off, most consumers are just not ready to accept the concept of music as a service rather than as a product. Convincing consumers otherwise will take an expensive marketing effort that the surviving services from MTV and Yahoo have promised, but not yet delivered.
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