Pay services high on promises

A Napster revival with a paid service? AOL pushing legitimate music downloads? What do these two widely reported stories have in common (other than their lack of hard news)? It must be the week when the music-stealing public finally has its chance for redemption.

After what feels like a million years (probably only six) of downloading copyrighted music through services such as the old Napster and its evil spawn of peer-to-peer networks, digital music aficionados now have many pay services at their disposal, with the attendant promises that the artist will be paid. You've got MusicNet, a service from RealNetworks, BMG, and Warner Music now being pushed by AOL. Then there's PressPlay, from Sony and Universal. And don't forget Listen.com's Rhapsody. All of which have deals with the major labels and indies for a wider selection of music.

Now up steps Napster, revived from the dead by Roxio, which gobbled up its assets -- without the liability aftertaste. The "news" is that Roxio will re-launch Napster by the end of the year as a similar pay service to the above, with founder/icon Shawn Fanning as consultant. Yippidy-do-dah. InternetNews.com's Ryan Naraine does the best job summing up the mega-hurdles for the reborn Napster: "Listen.com's Rhapsody, MusicNet, Pressplay have all gotten a head start in the race to hawk digital music files online and, even those companies have found it tough to sign up enough subscribers to justify the set-up costs."

One of the steepest setup costs is the licensing fees from the major labels, who demand 50 cents on the dollar download. "When overheads and bandwidth costs are calculated," Naraine writes, "the music services end up making next to nothing." Oh joy. The music industry still doesn't get it.

AOL to the rescue?

Maybe America Online, the service America loves to hate, can make some hay with this whole pay-music scheme. For a mere $8.95 per month, you'll be able to listen to 250,000 songs via MusicNet. The catch? If you want to burn 10 songs onto a CD, it will cost $17.95. Sound like a familiar number? Yup, it's close to the sky-high retail price of CD albums these days.

The New York Times' Saul Hansell looks oh-so-deeply into AOL's big announcement, does a great job of explaining how the pay services have struggled, and finally hits on just how AOL will be the white knight for the music biz: AOL's version of MusicNet "would be far more popular because it would be integrated into the AOL service," says one exec. One analyst tries to work up excitement: "This is close to what people will find palatable." Oops, one caveat: The limitations are still significant, he admits.

So we've got a me-too service from AOL that will really break through because it's on AOL, and it's close to palatable!

Better that the music industry execs avoid the latest media column from Michael Wolff in New York magazine, in which he warns that all the screaming and bulging veins in their necks isn't going to stop the dropping value of content. He says the Internet is partly to blame for undermining content value, along with music licensed everywhere, and freebie magazine subscriptions. The fact that music, "on a unit basis, has continued to go up instead of down is, in fact, an odd and exceptional business model -- which a prudent person should have logically assumed would never last," he writes.

As entertainment becomes closer and closer to free, will the music companies finally wise up and lower the cost of digital downloads to something actually palatable for consumers? Let's hope they find the "tipping point" that will bring consumers back from their pirating ways. That's going to mean less money for the label chiefs, the promo folks, the production types, and yes, even the artists. But much, much more for the public.