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Even now, Yahoo's portable option costs $12 a month with a 12-month commitment. When Yahoo Music Unlimited was launched last year, it cost just $4.99 a month, about a third of the price of competing offerings from RealNetworks and Napster. (The services, obviously, don't work with iPods.) When customers stop paying, the music literally won't play. Yahoo Music Unlimited is one of a handful of portable-subscription services that allow users to rent unlimited amounts of music for a flat monthly fee and transfer it to a digital-music player. Yahoo's main tool in that effort has been low prices. 'And you've got to figure out a way to monetize them.' Vice president and general manager for music at Yahoo, of Sunnyvale, Calif. 'You've got to figure out a way to get that large base of consumers who right now think music should be free,' says YAHOO MUSICĪt the other end of the spectrum, some retailers are trying to entice the kind of people who launched the digital-music revolution with illegal downloading - and never bothered to move on to legitimate online music. For instance, the company's premier offering was a six-hour package of piano concertos for $19.99.

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The cost of the download is included in the purchase price, which can be much lower than a traditional CD. Pakman matter-of-factly calls the product 'a box of air.'

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Instead, consumers retrieve a code that allows them to download the music described on the package. EMusic recently began selling 'prepackaged digital music in a box' at all 650 Borders stores.ĭesigned to look roughly like a CD case, the package features familiar elements like an informational booklet. The company is now looking to expand its customer base by attracting people who still shop for CDs - generally, people 25 or older who may be intimidated by downloading music. As with most cellphone minutes, unused downloads don't roll over to the next month.

For $9.99, they get 30 downloads $14.99 buys 50 downloads and 75 downloads a month cost $19.99. a monthly fee for a specific number of song downloads. Patrons pay eMusic - owned by Dimensional Associates Inc., the private-equity arm of JDS Capital Management Inc. Indie-label executives and musicians have generally argued that access to iPod users outweighs concerns about unauthorized copying. Instead, it offers a broad catalog culled from independent rock labels, as well as jazz, world and classical music. The lack of protection means that eMusic can't carry major-label artists.

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Rival music retailers must use software from Microsoft - which isn't compatible with the iPod.īut eMusic has found a way around this limitation: It sells music in the 'unprotected' MP3 format, which can be played on virtually any portable digital-music player, including the iPod. But the software was proprietary, and Apple never licensed it to outsiders. Apple secured the rights to major labels' catalogs, in part, by using software that limited users' ability to copy songs. When Apple launched the iTunes Music Store in 2003, copy protection was a key issue. EMUSICĪttributes eMusic's comparatively strong 10% market share to one simple fact: The service, unlike almost every other iTunes competitor, is compatible with the iPod. It's too soon to know whether this moment represents a warning sign or an opportunity - but Apple's competitors are trying to make the most of it. Sales held steady at 137 million songs in the second and third calendar quarters of this year, a slight dip from 144 million in the first quarter. This year, sales of downloaded songs stalled amid a broader slump in music sales - the first lull since Apple launched the iTunes Music Store in 2003. The rivals' plans come at a time of uncertainty for the industry.

one of the companies tied with Microsoft for fourth place - is mounting a similar, if modest, effort through a partnership with hardware maker Microsoft is currently mounting the most ambitious assault on iTunes with Zune - a software and hardware 'ecosystem' that tries to mimic the successful synergy between iTunes software and iPod gadgets.

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