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This is Celia Hirschman with On The Beat on KCRW.
The record business may feel like it continues into darkness, but the digital-download business is looking pretty bright. Now that Apple is the clear market-leader for portable music players, with over 70 percent of market penetration, it's not surprising that others are seriously trying to hone in on the business. Though Steve Jobs announced a few years ago that his music division was simply a loss leader for iPod sales, it really wasn't. With over one billion tracks downloaded, Apple nets a cool $90 million after royalties just through iTunes. Add to that profits from the sales of iPods and you can see how a little music has made Apple Computers sing.
The economics have not eluded Microsoft, the giant of all computer companies. Engaged in a war with Apple since infancy, Microsoft is finally launching its own answer to the iTunes phenomenon. The Microsoft system, called Zune, is based on vertically integrated closed operations similar to iTunes and the iPod. The Zune brand will encompass the device, a software program to run it, as well as a music, media and movie service. The player will be in stores in the next couple of months, retailing for $289. Zune will have its own digital-rights management software embedding on each track, making migration from some of the other players difficult. Rumor has it Microsoft will be offering iPod users the chance to download songs previously bought from the iTunes music store, at Microsoft's expense. You can see why many people are wondering if Zune will be the iPod killer.
One of the best features of the Zune experience is sharing music. Wirelessly hook your machine up to a friend's Zune, and you can share your favorite new music discoveries effortlessly, at no cost to either of you. Your friend will get three days or three plays, whichever comes last, to sample the music. After that, your friend will be offered the option to buy. This is an exceptional way to sample music directly to consumers and I imagine major labels are thrilled with the inventiveness.
If you don't believe in having digital-rights management rules (otherwise known as DRM), control how and when you play your music, the best way to legally download is to go through services that offer music without DRM. eMusic.com has built a thriving business around this model, offering music files without DRM to millions. Only the Indie labels have allowed their music files to run free without DRM coding, so emusic is limited in its catalog.
But in a baby step move this week, Yahoo Music gave consumers a taste of what a track with no DRM might feel like. Yahoo offered DRM-free downloads of Jesse McCartney's new single, courtesy of Hollywood Records. It remains to be seen if Yahoo is planning to change to a DRM-free zone.
And in related news, the company that originally created file sharing with no DRM in America, Napster announced it was seeking investors.
Thought the future may be bright for some, it's unclear just who will be left standing in three years.
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