The Past (And Future) Of Online Music

Spotify; courtesy of Spotify i i

This is all Americans get of Spotify. () courtesy of Spotify hide caption

itoggle caption courtesy of Spotify
Spotify; courtesy of Spotify

This is all Americans get of Spotify. ()

courtesy of Spotify

Back in 2001, I sat in a San Francisco federal courtroom and watched a judge order Napster to shut down. The record companies won their battle against the world's first peer-to-peer file sharing service. But, as everyone now knows, it was a Pyrrhic victory; to reference another Greek myth, Napster turned out to be a Hydra. File-sharing services are a multi-headed beast, so every time the record companies cut one off, two more pop up to take its place. Now, 10 years since Napster's peak, the number of songs traded illegally over the Internet amounts to more than 15 billion tracks a year, according to the online media tracking company Big Champagne.

Arguably, the mistake the industry made back then was being tone-deaf to the needs of its customers. Fans wanted singles and were sick of paying $16 to $20 for a CD with one good song. Instead of finding a way to work with the new technology, the industry tried to stick its head in the sand and sue its customers. It took the labels a long time to offer music in a way that fans were willing to pay for, and even then, it took outsider Steve Jobs to get the ball rolling via iTunes.

According to Eric Garland of Big Champagne, an increase in the availability and convenience of legal services is causing the number of illegal downloads to flatten or even decline. But this is a fragile moment. The recording industry needs to keep focusing on what fans want if it's going to survive.

One of the most chatted-about models comes from Spotify, a Swedish company offering access to six million songs from major and independent labels. You can listen for free as long as you're willing to put up with a few ads. It caught on quickly in Europe and now claims to have more than six million users. The company has been trying to make money with a higher-level subscription membership that grants access to the music without the ads and gives access on iPhones and Android phones.

But if you visit Spotify's Web site from any computer in the U.S., a message pops up: "Why is Spotify not available in my country?" If you click on the questionm the answer is that you can't get the service because of "licensing restrictions."

Garland says the labels gave Spotify a shot in Europe as an experiment, but that they were wary of a launch in the much more lucrative U.S. market. Spotify, he says, predicted that it would be able to lure a large percentage of its users into paying for higher-level ad-free service. But that hasn't been the case: The company won't reveal the numbers, but fewer than 10 percent subscribe. Unfortunately, the ad model doesn't generate enough revenue to satisfy the labels.

Spotify executives say they're likely to launch in the U.S. early next year. But Garland says they probably won't offer the free ad-based service. Instead, in all likelihood, only the subscription model will be available, downgrading Spotify to just another Rhapsody or revamped Napster.

Even if the ad-sponsored Spotify were to make it to the U.S., many people — including this reporter — might find it unsatisfying. I want to own my music, not rent it. I want to store it online and access it from wherever I am, whether I'm in China, France or Cleveland. But the labels don't like his model; they want to charge customers for both purchasing the MP3 file and storing it in the cloud.

Back in 1999, during the height of the dot.com boom, a company called MP3.com tried to offer that service. But, the record labels sued and won. They said that allowing people to listen to their music from anywhere amounted to letting them broadcast it for free. Essentially owning a MP3 file doesn't mean you have the right to play it over any device.

We have been slowly creeping toward a world in which there are easy options to legally download music. But the emphasis is on the word "creeping." When will we have the ability to buy music, store it online and access it from anywhere? "At the rate we're going," Garland says, "I'd predict 2020 or 2025." The last decade has brought a world of change, but it's sounding like the next one is going to move pretty slowly, at least for new music technology.

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