The big players in the digital music space continued to make multiple bets
on paid subscription services, a trend that further signals consolidation
among competitors.
A day after Seattle-based MusicNet backer RealNetworks acquired a minority interest in rival Listen.com, reports say Sony Music, which
co-owns the Pressplay service, has acquired a 4 percent stake in
MusicNet.
The multiple betting is not uncommon in the nascent paid download
industry. The big five music labels all have equity interest in the four
major digital services — MusicNet, Pressplay, Listen.com’s Rhapsody and
FullAudio. In exchange for the licenses to offer legal downloads, the
services give up equity, sources say.
It is the cost of those licenses that have been blamed for the financial
struggles of the digital music services. On average, the music labels ask
for 50 cents per $1 download, a reality that has put the squeeze on the
subscription-based services.
With free peer-to-peer alternatives like Kazaa and Morpheus attracting
millions of users, the legitimate services have found it tough finding a
lucrative market to sell the legal downloads.
It has been a very busy week for digital music firms. First, Roxio announced it would relaunch Napster as a legal service with backing from the labels and America
Online lifted the wraps off a revamped MusicNet on
AOL service that will allow CD burning capabilities.
