MusicMatch Joins Subscription-Free Party

NEW YORK — As executives huddle here to brainstorm business models for the online music sector,
another competitor in the space announced plans to hawk digital tracks via the a la carte
option.

San Diego, Calif.-based MusicMatch hopped aboard the subscription-free wagon at the Jupiter
Plug.IN conference & Expo, announcing a slew of download sale agreements with nine music labels
for a Web store to be launched in the U.S. this fall.

Financial terms of the licensing deals were not released.

MusicMatch, which claims 150,000 active paying subscribers for its $7 per month MusicMatch MX
service, said the deals would open up digital catalogs from three of the big labels — BMG, EMI
Music and Universal — and six indie labels, including Hollywood Records, Roadrunner Records,
Sanctuary Records and TVT Records.

A company official told internetnews.com negotiations are ongoing with Sony Music and
Warner to add catalogs from those labels to the service.

“With these deals, MusicMatch can sell digital albums and tracks to consumers for personal
burning and transfer to portable devices, as well as playback on multiple PCs. The service will
be available for the Windows environment and does not require a subscription fee,” the company
said. Pricing and specifics on download rules were not made available.

The MusicMatch news comes as Roxio released details of the legitimate reincarnation of Napster
2.0 as a service offering both subscription and a la carte purchasing options.

Alongside MusicMatch and Napster 2.0, other services offering subscription-free downloads
include Apple’s iTunes and BuyMusic. Amazon.com and Listen.com are also testing paid download
music stores to be released in time for the Christmas holidays.

As the business shifts increasingly towards a subscription-free model, the discussion here
centered around comfortable price points for the ‘passive listening experience’ (Internet radio) and the ‘active experience’ (paid downloads).

Beyond the pricing issues, MusicMatch chief executive Dennis Mudd told the conference that
the crucial key to a successful music service lies in portability — the ability to move music
beyond the PC and on to devices in the home and in the car.

Beyond portability, Mudd argued that consumers are clamoring for a user-friendly
(non-technical) shopping experience. “People’s aren’t necessarily getting up in the morning to
look for a 99 cent song to download. They are looking for the complete music experience where
the ability to buy a song is integrated. That’s what consumers want,” Mudd added.

As expected, a lot of discussion centered on the availability of peer-to-peer networks
that allow users to download digital music for free. Acknowledging it is near impossible to
compete with free alternatives, Listen.com boss Sean Ryan said a company with a solid war chest
was better positioned to stay the course while the recording industry’s litigation strategy
makes it tougher to download music on file-sharing networks.

Listen.com has agreed to be acquired by Seattle-based RealNetworks and Ryan noted that a deep-pocketed corporate partner was important to ensure growth, especially in international markets.