An Overview of Digital Distribution
As the music industry scrambles to come up with a source of income from recordings to replace the declining sales of CDs, a number of companies have popped up with their own ideas and interpretations of what the solution might be.
iTunes
Apple’s iTunes continues to be the most popular way for people to buy digital music recordings online. The software was first used as the required method of putting music onto Apple’s popular mp3 player since its launch. The iTunes Store opened later and became one of the first of its kind. With music piracy such a common thing, it seemed as if iTunes had some of the same challenges as the people that started marketing bottled water. Will people really pay for something if they can get away with not paying for it? Over 8 BILLION songs later, it seems like they will!
Rhapsody & Napster
After becoming the first major p2p file sharing software and playing a big part in the wave of internet piracy, Napster has since become a legit digital music distribution service. Napster and Rhapsody both offer a type of music rental service. They charge a monthly fee ($5-$13) in exchange for the ability to stream any of their millions of songs for free on demand. Both of the services allow you to load music from their catalog onto certain specific mp3 players as long as you keep paying the monthly charge.
Spotify, iMeem, etc.
Free music that’s legal? These companies are trying to do that by paying the licensing fees by showing ads along with their streaming services. Although not yet available in the US, Spotify has exploded in popularity with millions of European users. The only question is whether or not their business models will prove profitable in the long run.
What’s the verdict?
iTunes has positioned itself as the top dog in sales of MP3s above Amazon and other competitors, but with prices similar to the cost of buying a CD, some music fans are moving to other sources of music that don’t require them to purchase songs and albums. Personally, I’d like to see streaming services like Spotify gain popularity. I read an article here that includes a quote from a representative of the biggest record label in Sweden saying that they receive more of their income from Spotify than from iTunes. However, Spotify also charges a monthly fee for an ad-free version of its service. So far there hasn’t been much proof of the ability to generate enough income from ads alone to pay for streaming costs. The shutting down of SpiralFrog earlier this year has been proof of that. They spent millions on marketing while only receiving thousands in revenue which can only work for so long. The next couple of years will bring a lot of new changes and ideas for digital distribution, especially in the category of internet streaming.
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