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FROM THIS EPISODE

This is Celia Hirschman with On the Beat for KCRW.

This week, there was a flurry of announcements in the digital music space. The most interesting came from the nonprofit organization RED. RED, founded by U2's frontman 'Bono and Company,' is building a service to deliver three exclusives downloads to consumers each week, for a modest fee of $5 a month. Half of the money will go to the RED Global Fund to help fight AIDS in Africa, and the other half will go to the artists and record label. Each week, RED's music service will deliver three downloads. One song will be from a major act like U2 and the other from a less established artist. A third "crackerjack" surprise will compliment the download. Music will be delivered via MP3's with no Digital Rights Management code. Artists like Bob Dylan, Elvis Costello, Elton John, Death Cab for Cutie, Emmylou Harris and U2 have already committed works for the new service. It will begin in September, and they still haven't sorted the name of it.

And the subscription service Rhapsody, also made several announcements. First, Rhapsody launched their new MP3 store with no DRM. Consumers can now purchase MP3 files from Rhapsody for playback on any MP3 player, even an Apple iPod. Prices are similar to iTunes and there are over 5 million songs in the Rhapsody MP3 catalog. The distinguishing feature here is that you can sample the entire song, not just 30 seconds of it, before you buy. As part of the launch campaign for the store, Rhapsody will give away a free album to the first 100,000 people who sign up for an account. In addition, Rhapsody has joined forces with companies like Yahoo Music, MTV, VH1 and CMT to offer DRM-free purchases of songs on these sites.

But perhaps the most interesting announcement came from Rhapsody's social networking initiative. The company will begin monetizing sites such as iLike with music-purchase features for consumers. iLike is a powerful social music discovery service. It is the dominant music application on Facebook, MySpace and Bebo. So, with over 28 million registered iLike users, this new feature has great potential to monetize an otherwise non–existent market.

The future of the digital music business rests on two factors. First, the ease with which potential customers can discover music. Music discovery is the single most important facet of the new record business. With millions of tracks available on the web, it is imperative that companies consider the consumers' experience, and offer filters to help them find great new talent. Only with powerful online discovery, will the majority of consumers be willing to make purchases.

Secondly, businesses need to make the process of enjoying digital music seamless. If consumers need special equipment or knowledge to transfer from CDs to MP3's, or MP3's to wave files -- companies will lose millions of dollars in opportunity costs. Websites and hardware need to be idiot proof -- never forgetting it's really about the music.

This is Celia Hirschman for On the Beat on KCRW.

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