MP3's company: Industry heads explain their online music services

Digital music sites are exploding on the Net. Here's how to find the best service for you

By Newt Briggs

Remember the last time you paid too much for a bad CD? Remember the light-headedness, the twitching, the existential rage that accompanied the realization that you just dropped $20 on an album you wouldn't even deign to use as a coaster for a warm Yoo-hoo? Okay, so maybe it wasn't the equivalent of Sartre's nausea, but it was certainly enough to turn an otherwise pleasant afternoon at the record store into a consumer nightmare.

Now imagine, if you will, a world in which music buying isn't an anxiety-ridden chore but a jolly-time romp through an interactive world of 30-second soundbites, individually crafted playlists and expert advice. I know, I know, it sounds like some kind of robot butler pipe dream, but consider the possibilities: no more understocked shelves, no more checkout lines, no more hipper-than-thou sneers from the 18-year-old clerk who doesn't approve of a grown man buying the new Justin Timberlake album and, most importantly, no more CDs--that is, unless you yourself want to burn them. No, nothing more than immediate gratification and the comforting knowledge that you spent less than a buck on a product that might have cost you $18.99 (before tax) at your local CD retailer.

Well, the future is now, my friends, and if you have yet to purchase an MP3 or other compressed music file online, then you're officially light years behind the curve. As Napster president Brad Duea notes, "When we bought the Napster brand in 2002, everybody said we were idiots because the digital music market was dead. Now, less than two years later, this is a $36 billion global enterprise that's showing no signs of slump or decline."

In fact, more services than ever are throwing their cyber-hats into the online music ring. With Napster and iTunes already firmly established in the market, Wal-Mart, Sony and Microsoft are angling for their share of the digital pie. And this makes no mention of niche services such as eMusic, which are catering to specific demands within the online community.

But which service to choose? The answer depends on a number of factors, including computer platform, budget and, of course, musical taste. Most of the primary services--iTunes, Napster, Wal-Mart, Sony Connect, MSN Music, etc.--offer major-label artists at about $1 a song. All require specific software to access their sites, and all the songs are saddled with some kind of copy protection. Of those listed above, iTunes is currently the most generous with its usage rights and Sony the most stringent.

But while all the services dispense a la carte downloads, Napster is the only one that offers a $10-a-month subscription model that permits unlimited downloads of the site's entire catalog. The catch: The songs downloaded on the subscription plan cannot be burnt to CD or transferred to a portable device, and they become unplayable when and if the subscription lapses. As some less-than-enchanted critics have noted, it's essentially the equivalent of renting the songs, but according to Duea, the ideal Napster user "is someone who loves music and wants to experience as much music as possible for a minimal monthly fee. It's also someone who understands and values their time and wants to become a smarter consumer."

"It's the hybrid model that sets us apart from iTunes," Duea adds. "We have everything everyone else has--individual downloads, integrated Billboard charts, online community, sharable playlists, etc.--but we also offer unprecedented access to one of the largest music collections in the world."

On the opposite end of the subscription spectrum is eMusic, which offers an open-ended plan that allows 40 song downloads per month for a base price of $10. Once songs are purchased, they can be downloaded an infinite number of times in an unrestricted MP3 format. The catch: eMusic does not offer a single track from any of the five major music labels. In other words, you won't find Britney Spears, Jay-Z or the Killers anywhere on the site--probably not ever.

"eMusic is an attempt to find and cater exclusively and extensively to the 30 percent of music buyers in the world who buy non-major-label music," says eMusic managing director David Pakman. "There's something exciting about being able to say that not everyone is your customer. If you're iTunes or Napster, you're trying to cater to everyone all of the time. In our opinion, that's an exercise in futility."

Instead, eMusic focuses on albums and singles from independent labels such as Matador, Epitaph, Southern Lord, Relapse, Fantasy and Stax. For example, one month's subscription allotment would allow an eMusic user to download Yo La Tengo's I Can Hear the Heart Beating As One, Miles Davis' Bags' Groove, Isaac Hayes' Hot Buttered Soul and the Detroit Cobras' Mink Rat or Rabbit. These albums--or individual songs--can then be transferred to any digital music player and burnt to an unlimited number of CDs.

To date, the eMusic experiment has proved remarkably successful. With basically no marketing or promotion, eMusic has amassed more than 70,000 subscribers. Based on the minimum subscription rate, that's a monthly take of $700,000--half of which goes to the artists and half of which stays with eMusic. According to Pakman, it's a win-win-win-win for consumers, artists, labels and e-commerce as a whole.

And it will only get better when eMusic launches its new version on Sept. 22. Although Pakman is keeping many of the specifics under lock and key, he says the new eMusic will be centered on an online community that will allow subscribers to interact, share tastes and even meet. "There's a lot of discussion that goes on about independent music because it's sort of like a bonding thing," says Pakman. "It's like, `Oh, you like stuff other than 50 Cent, too. That's cool.'"

The new eMusic will also offer significantly upgraded search tools and--perhaps most notably--editorial content written by some of America's foremost music scribes, including Our Band Could Be Your Life author Michael Azerrad and former New York Times pop critic Ann Powers. Says Pakman: "We've spent the entire summer writing columns, essentials guides and reviews and blurbs about albums as a way of putting some context around everything we offer on the site."

The only things that subscribers aren't likely to see are major-label releases. "The major labels require a bunch of draconian protections on their digital music," says Pakman. "And the last thing we want to do is start selling mainstream stuff in some proprietary format that's copy protected and limits you. I'm not necessarily criticizing it, but my feeling is, if you're going to sell a digital good that is inferior to the physical product, it should be a whole lot less expensive."

Ultimately, the choice of online music services comes down to a cost-benefit analysis. If all you're looking for is Top 40 pop and you have the hardware necessary to access the sites, iTunes, Napster and Wal-Mart appear to be the best bets. But if your tastes stray toward the more eclectic or you want to find the most bang for your buck, eMusic might better serve your listening needs. Either way, no service is likely to become the end-all, be-all for any consumer's musical tastes.

"The history of music consumption shows that people obtain music through multiple channels," Pakman says. "The same buyer can go to Amazon, can join Columbia House, can buy a CD at Starbucks, can download stuff on the web and can borrow music from friends. So we don't ever expect eMusic to be the only way anyone's ever going to get music. But clearly there's a massive shift under way from physical to digital. I don't know how long it will take--probably at least another 10 years before CDs are a tiny, tiny fraction of the market share."

And in at least one way, the tyranny of the CD is already coming to a swift and decisive end. The ability to select and purchase individual tracks liberates consumers from the fiscal tyranny of the album format.

"Some pieces of music are extraordinary in their entirety and people will listen to them as a unified body of work," Duea says. "However, in many cases and for many artists, the album has been more about a business model for the labels. It's your classic bundling model. The consumers really want two songs, but if we bundle it with 12 others they don't want and sell it for $14, it's a higher register ring than we would have gotten by selling those two songs separately in a store. In other words--under the new, online paradigm--great albums will continue and people will want to hear them as great albums. But when albums aren't so great, people will be able to exercise their freedom of choice and buy the two singles they like without worrying about making a big financial investment."