GIVE THE CONSUMERS WHAT THEY WANT
Just after the AES show doors closed, Microsoft and Real Networks announced that RealNetworks has settled its antitrust case against Microsoft (filed in December 2003) and the two companies have created a partnership to create more choices for the consumer in the digital music and games industry. Included in the partnership is Microsoft's promotion and marketing support of RealNetwork's Rhapsody digital music subscription service on MSN properties (as well as promote use of Windows Media technologies with Rhapsody to Go) and offering RealNetworks' digital games through MSN Games and Xbox Live Arcade for Xbox 360. In doing this, Microsoft will pay Real $301 million in cash and provide services during the next 18 months to support the product development, distribution and promotional activities.
Meanwhile, another player has joined the field: MusicGiants Network, which offers high-definition digital recordings from EMI Music, Sony BMG Music Entertainment, Universal Music Group and Warner Music Group. Downloads are priced at $1.29 each (as compared to Rhapsody's $0.49 and iTunes' $0.99 each) and are offered in Windows Media Audio Lossless format (1,100 kbps). To start, users must have a PC running Windows XP or device that supports Windows Media Audio Lossless and Windows Media DRM, register online, download (or via CD-ROM) MusicGiants' Network software and open an account by paying the $50 annual fee. MusicGiants will then credit the customer's account with $50 for music purchases.
Looks like competition against Apple's reign in the digital music domain is heating up — although Apple, which owns 80 percent of the market, is making continual strides in the marketplace.
The next day, Apple announced iTunes 6, which adds more than 2,000 music videos and six short films from Pixar Animation Studios for $1.99 each. Also, the company inked a deal with Disney, whereby current and past episodes of Desperate Housewives, Lost, Night Stalker, That's So Raven and The Suite Life of Zack & Cody will be available through the music jukebox and online music store for $1.99 each. Customers can purchase and download these shows from iTunes the day after they air on TV, watch them on a Mac or PC and auto-sync them to the iPod. iTunes 6 is available as a free download at www.apple.com/itunes.
While competition in the digital music domain is becoming fiercer, the underlying key to success is giving consumers what they want. Case in point — the first Platinum commercial download: Gwen Stefani's “Hollaback Girl.” The track will also soon cross the 1 million mark in ringtone sales.
According to Jimmy Iovine, chairman of Interscope Gefen A&M (Stefani's label), “The music industry is changing, and this is a major sign that digital downloading has reached the mass market and become a very significant business.”