Rivals Hope To Sink iPod With Rented Music

Is music something you own or something you rent?

How music fans answer that question in coming months will help determine the viability of a new slate of online music services that offer to fill portable music players with an unlimited number of songs for a monthly fee.

While the music subscription approach has grown in recent years, far more music fans have opted to buy songs by the track, a business model popularized by Apple Computer Inc.’s iTunes Music Store and its hugely successful iPod portable player.

But the release late last year of new copy-protection software from Microsoft Corp. may begin to change that. The software frees subscribers to move their rented tracks from their computers to certain portable music players.

The system works by essentially putting a timer on the tracks loaded on the player. Every time the user connects the player to the PC and the music service, the player automatically checks whether the user’s subscription is still in effect. Songs stop playing if the subscription has lapsed. If the user doesn’t regularly synch up the player with the service, the songs go dead as well.

“This is potentially the first serious challenge that the iPod is going to face,” said Phil Leigh, president of Tampa, Fla.-based Inside Digital Media. “What these devices are going to be able to do is attack iPod where it’s weak.”

Several online music purveyors see portability as selling point that can lure consumers to their subscription services. Forrester Research projects music subscription revenues will more than double this year to $240 million, largely because of portability.

RealNetworks, MusicNow and MusicNet, which distributes its service through brands like America Online and Cdigix, all have plans to launch portable subscription services this year or early 2006 at the latest.

Napster LLC and F.Y.E., another MusicNet distributor, began offering portable subscriptions late last year through the Windows Media Player software, code named Janus.

Napster plans to turn up the heat on Apple with a $30 million advertising campaign debuting during Sunday’s Super Bowl to promote a relaunch of its portable subscription service, dubbed Napster To Go.

“This is really the first subscription service supporting Janus that’s going out in a big way,” said Josh Bernoff, an analyst with Forrester Research. “Napster is charging a lot harder than the rest of them.”

Napster’s service is $14.95 a month

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