There's a lot of buzz of late about new iTunes equivalents that aim to change how you download music for portable devices.
Time Warner's AOL unveiled a new service the same day Universal Music Group said it's teaming with SpiralFrog.com to offer free ad-supported downloads. Soon after, Samsung announced that it will offer music downloads through an online partner. MySpace has now followed suit and announced a partnership with digital music service Snocap, which will let artists sell music directly to consumers through their MySpace pages. Buyers will then be able to transfer songs to any music player, including Apple's iPod.
Samsung, AOL, Universal Music and MySpace are flocking to an already crowded market dominated by Apple's iTunes, which controls 70% to 85% of legal digital music in the US, depending on the estimate. The market generated USD 400 million in 2005 and is expected to reach USD 14 billion by 2011, according to Britain-based Jupiter Research.
What sets apart this fresh crop of download upstarts? One way or another, they're all departing from the pay-per-song business model that iTunes has mastered.
AOL is one of the companies banking on the dual model. Its Music Now service offers both a 99 cents-pay-per-track service and a USD 14.95 monthly subscription that lets users download an unlimited number of songs. "We want to put the choice in users' hands, and we want them to be able to choose what device they want to use and what is the model that best fits them," says Amit Shafrir, AOL's president of premium services.
Samsung, through its partner MusicNet, is following a similar strategy. So might Nokia, which bought online digital music platform Loudeye to offer its consumers the ability to purchase digital music.
SpiralFrog.com is experimenting with an altogether different, and little tested, approach. Beginning in December, SpiralFrog.com will offer free downloads, but serve up advertising in the form of rich media, video, and banner advertisements during the 90 seconds it takes to download the song. Once downloaded, the songs can be played on portable music devices for up to six months.
A big reason for bullishness on Apple's prospects is that Apple not only dominates legal music downloads, but also the handheld devices on which they're played. The company has sold more than 50 million iPods around the world and except in the case of MySpace, songs downloaded through non-iTunes players won't work on the iPod. Until a new player compatible with these services gains popularity, it is unlikely that massive numbers will switch their music buying habits, says Mulligan.
Microsoft plans to mount a challenge to iPod by the end of 2006 with its Zune media player, which will be manufactured by Toshiba. However, Zune is unlikely to take a big bite out of iPod sales, said Shaw Wu, an analyst at American Technology Research. For starters, the Toshiba-made device is too similar to a Toshiba's Gigabeat and includes wannabe iPod components such as a fake clickwheel, Wu noted.
Wu described the device as 'underwhelming,' citing specs filed with the Federal Communications Commission. Zune is more likely to cannibalise sales from other companies, such as Creative Technologies and Sony, which use Microsoft hardware in their media players. "We believe its success will likely come at an expense and be limited by its lack of differentiation vs. other Windows players," Wu wrote in a recent research report.
There's a chance rivals can erode Apple's lead at some stage, Mulligan says. The digital music player giant may eventually suffer from its own market dominance, he reckons. "If you are trying to build your market on coolness, that doesn't sit very well with mass market," he says. "Apple could be a victim of its own success."
But even he doubts the victimisation is imminent. "All that said," Mulligan adds, "I don't see Apple being toppled from its throne any time soon."
As the holiday shopping season approaches, the number of would-be iPod and iTunes hitting the markets is surprising. With all the competion, reports still insist that Apple’s domination of the digital music market is going to be a tough nut to crack because its business model and user base are established and difficult to duplicate.
Last quarter, Apple sold more than eight million iPods. There have been no new product enhancements since then, so if there is a sales slowdown this quarter it will be a signal for Apple that it can’t afford to be complacent.If there is no slowdown in iPod sales, it will be a signal to Apple’s competitors that they’ll need something more than slightly fancier me-too devices and web sites to be players in this space.
On the other hand, according to the New York trend forecaster Zandl Group the iPod backlash has begun. Zandl regularly surveys 2000 youngsters aged eight to 24 on a variety of topics including music tastes, clothes and techno products. For the first time last month, the iPod started attracting negative comments. "There were complaints about the batteries dying after the warranty ends," Zandl's Carla Avruch says. "They are expensive. There's a lot of cynicism about that.
"The iTunes format is also attracting complaints. People can't easily transfer their music to other players. "The iPod is still very popular but there are signs of a backlash." It's not only teenage consumers who are looking for an alternative to the iPod. The music industry is also keen to see someone break Apple's hold on digital music. That hold, along with the international expansion of iTunes, means Apple is now selling songs at the rate of about a billion a year. In the eyes of the music companies, Apple has become an over-mighty retailer, demanding too much say in matters such as pricing.
MySpace
MySpace will challenge Apple's iTunes in the music download market following a deal with Napster founder Shawn Fanning's technology company.The social networking web site, owned by Rupert Murdoch's News Corporation, has signed a deal with Snocap, which provides back-end services for selling music online.
Details of the deal were not made public, but it is possible that News Corp could end up taking a minority stake in Snocap. MySpace co-founder Chris DeWolfe said, "The goal is to be one of the biggest digital music stores out there. Everyone we've spoken to definitely wants an alternative to iTunes and the iPod. MySpace could be that alternative."
MySpace is adding a music-store feature that will allow artists, labels, and the site itself to cash in on the popularity of those songs. The new feature will allow musicians, whether a record label backs them or not, to sell songs directly from their MySpace profile pages.
Assuming that the songs for sale do not violate a copyright, the artist or label can set a price and allow web users to buy songs the way they might with services such as iTunes and Yahoo Music. The service is in trial and will be available broadly by the end of the year.
It is a first step into e-commerce for Los Angeles-based MySpace, which makes money through advertisements on the site. MySpace has revolutionised how its mostly young users communicate and share music, and the company said it could venture into other forms of online ticketing and commerce.
"We think it's going to make a reasonable amount of money, but most of the money will go to the artists," said Amit Kapur, director of business development for MySpace. This product is directed primarily to appeal to unsigned artists, but similar deals could cater to other artists' needs in the future, he said.
The announcement comes on the back of news of Spiralfrog, the first service to offer free legal downloads supported entirely by advertising.
Microsoft Zune
Microsoft is rumored to launch 'Zune', a music/media/game player on November 14th. Zune should have a 30GB drive, black, brown, and cotton color options, with a duotone approach on each, FM tuner, 13 first party accessories available at launch, and a 50% larger screen than the iPod with video.
Microsoft Zune 30GB will cost USD 399. Apple sells iPod 60GB for the same price, whereas iPod 30GB costs USD 299. Microsoft, however, believes that customers will be eager to pay more for its Zune player because it has broader feature-set, including ad-hoc music sharing between a group of people in the range of the device as well as digital radio.
Japanese electronics maker Toshiba will manufacture the 'Zune' portable media player,. Toshiba's role was disclosed when the electronics company filed papers with the Federal Communications Commission. Kyrsa Dixon, a spokeswoman for one of Microsoft's public relations firms, confirmed that Toshiba would make the device.
Photos included in the filing show a white rectangular device with a large screen and several buttons. The minimalist feel closely resembles Apple’s iPod.
One feature will allow a person to act as a DJ, sending music to up to four other devices. "Once your DJ setting is on, you don't need to do anything else in order for others to listen to your stream," the manual explained. "If someone tunes in, you will see an onscreen notification that you have a listener."
=Microsoft has said that Zune is key to the software maker's overall entertainment ambitions and that it will capitalise on and tie into the company's other entertainment offerings. These include the Xbox video game console, Microsoft's television technology, and the media-focused version of the Windows operating system that lets people do things like record and watch live television.
Still, Microsoft is expected to face tough competition from the iPod and iTunes juggernaut. Other hardware manufacturers, including Creative Technology and Samsung Electronics, offer portable media players using Microsoft's software, although they've had little success against Apple.
Samsung
Samsung Electronics plans to introduce its own online music service to compete against Apple Computer’s iTunes-iPod franchise and Microsoft’s upcoming Zune music products.
Samsung said the online music service will be compatible with its upcoming line of portable MP3 and media players, but did not disclose further details about the service, pricing, or fees. Samsung representatives were not immediately available for comment.
Analysts expect the company will try and achieve a similar kind of integration between the music software and portable devices as Apple’s iTunes Music Store and iPod player combination.
"Apple has shown that to do this, you have to control as many of the parts of the chain as possible," said Mike McGuire, an analyst at Gartner Inc. market research firm. "Microsoft is taking a page out of Apple’s book, and now Samsung is, too."
SpiralFrog & Universal Music
SpiralFrog prepares to offer ad-driven free music downloads to fans. Consumers won't have to pay anything, but they will experience longer download times than iTunes or Napster. Downloading free music from SpiralFrog will take approximately 90 seconds, and will be accompanied by advertising appearing on monitors. The whole idea behind SpiralFrog is to offer music in exchange for watching advertisements.
Or, as SpiralFrog Chairman Joe Mohen said, "The currency we're using is time."
Aside from watching advertisements, SpiralFrog tunes will differ slightly from songs purchased on other online services. Although consumers will be able to transfer the songs from computers to personal players, they will not be able to burn the songs to CD.
"We believe SpiralFrog will deliver an audience we highly desire and need to reach," said Oscar Feldenkreis, Vice Chairman, President and COO at Perry Ellis International. "Our audience is heavily into music and can be more easily reached on the Web. We see SpiralFrog as an ideal place for us to communicate and build lasting relationships with our core audience and give us unique new revenue opportunities."
Google
Google has unveiled Google Music Trends, which allows you to see what music is most popular across the entire Google Talk network of users. The new feature allows Google talk users to leave up to 10 minutes of voice-mail as well. The new project displays the text, "See what Google Talk users are listening to".
This tool was helpful in showcasing on which part of the world is currently searching for what kind of keywords on the Google search engine. Now Google wants to use the ability of their Google Talk messenger to display currently played songs on a computer to compile similar reports.
The web site defines Google Music Trends; Music Trends is a snapshot of the music that’s popular right now among Google Talk listeners. Every Talk user who has opted in to Music Trends will cast their vote automatically, each time they listen to music on their computer. We’ll gather this information and display the trends by country and by genre, listing the favorite songs of the most musically active locations around the world.
Click through from the results to information pages about the artist or album, courtesy of Google’s Music Search. One more click and you could be at one of a number of online stores from which to buy the music, either as a digital download or on physical media.
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