Year in Review: Digital Music Stores

There have been a number of changes during 2008 with respect to digital music stores, in particular a number of subscription services have begun to offer paid downloads (in addition to subscription packages) with many of these paid downloads now being made available without digital rights management technology.

There has been an increase in the number of United States universities now offering access to digital media stores including subscription services as part of their attempt to dissuade students from using file sharing networks.[1] A report released by EDUCAUSE in October 2008 indicated that 15% of campuses are currently offering access to these services with another 17% considering this option. [2] Among universities with residence accommodation 97.9% offer high speed internet connections with 85% of these being greater than 10Mbps and 44% 100Mbps.[3]

In June 2008 it was reported that iTunes had sold its 5 billionth track in the United States coming some five years after the store was launched in April 2003.[4] The US Store has the largest of all music catalogues with an estimated 8 million tracks.[5] Consumer perception in the United States continues to hold iTunes as the most favoured music destination with iTunes the second largest retailer of music in the United States behind the department store Wal Mart and ahead of Best Buy and Target.[6]

Amazon also launched its own music service in 2008 selling DRM free mp3s from a catalogue of 2.9 million songs.[7] In April 2008 it was estimated that Amazon held one tenth of the market share of iTunes in the United States or 2% of the American music market, coming a distant second in popularity to iTunes.[8]

WalMart also entered the paid downloads market offering DRM mp3s but was forced to operate without tracks from Warner and Sony BMG due to licensing limitations imposed by the labels.[9]

Limewire also launched a new music service focusing on independent artists rather than those signed to major record labels with a catalogue of approximately 500,000 songs.[10] Consumers can pay $0.99 per track or elect to pay a monthly fee of $20.00 for 75 songs reducing the per track cost to just $0.27.[11] In addition to this the store is now offering live recordings of a number of artists which were recorded specifically for the store.[12] The store is at present offered independently to the file sharing network.[13]

In October 2008 it was reported that EMI was planning to launch its own digital music portal combining tracks with music videos and other unique content.[14]

The Rhapsody music service is now a joint venture between Real Networks and MTV Networks and boasts a membership base of 1.87 million including premium radio subscribers.[15] It now offers full length streams as opposed to 30 second samples with a catalogue of 5 million songs.[16] The store also offers DRM free mp3s encoded at 256kb with albums priced at $9.99 and tracks costing $0.99 cents each.[17]

Napster was sold to Best Buy for $121 million with 750,000 subscribers.[18] In May 2008 it was reported that Napster was launching its own paid download service in addition to maintaining its subscription service.[19] Napster has a catalogue of 6 million tracks which will be sold as DRM free mp3s.[20]

The integration of music services with external content has also been a significant development over the past 12 months. YouTube has begun offering links to iTunes and Amazon to enable users to purchase music, books, films and other material related to the clips on its site.[21] At present these links are only available to residents in the United States.[22]

Similarly Yahoo also indicated an intention to open its online music destination to information from outside services such as iTunes, Wikipedia, Flickr, Last.fm and Amazon.[23]

Popcuts is a new music service launched in August 2008 which charges 99 cents per track and then whenever someone else purchases the same track the original purchaser is credited funds which can be redeemed for more Popcuts music.[24] Offering an estimated 700 songs from 200 artists the site seeks to reward consumers for buying music.[25]

In China a new music service called WaWaWa was launched which offers consumers download packages of 88 songs for 20 yaun ($US2.92).[26]

Play, an ISP based initiative in Denmark offers subscribers unlimited downloads with DRM and as at October 2008 had totalled 60 million downloads with a subscriber base of 2.5 million users from the Danish population of 5.4 million people.[27]

[Note that eMusic and MySpace will be considered separately.]


[1] ArsTechnica, Download services increasingly popular with universities (9 October 2008) <http://arstechnica.com/news.ars/post/20081009-39-of-big-us-universities-now-offer-school-sponsored-music-movies.html> at 12 October 2008
[2] ArsTechnica, Download services increasingly popular with universities (9 October 2008) <http://arstechnica.com/news.ars/post/20081009-39-of-big-us-universities-now-offer-school-sponsored-music-movies.html> at 12 October 2008
[3] ArsTechnica, Download services increasingly popular with universities (9 October 2008) <http://arstechnica.com/news.ars/post/20081009-39-of-big-us-universities-now-offer-school-sponsored-music-movies.html> at 12 October 2008
[4] Digital Music News, The iTunes Store: Five Years, Five Billion Song Downloads (20 June 2008) <http://www.digitalmusicnews.com/stories/061908itunes> at 26 June 2008; Digital Music News, iTunes Store Turns Five; Four Billion Downloads Later (5 May 2008) <http://www.digitalmusicnews.com/stories/050508itunes> at 6 May 2008
[5] Digital Music News, The iTunes Store: Five Years, Five Billion Song Downloads (20 June 2008) <http://www.digitalmusicnews.com/stories/061908itunes> at 26 June 2008
[6] Slyck, Can't Catch a Break Against iTunes (6 April 2008) <http://www.slyck.com/story1684_Cant_Catch_a_Break_Against_iTunes> at 8 April 2008; Digital Music News, iTunes Becomes Second Largest Music Retailer, Fuzzy Math Applies (27 February 2008) <http://www.digitalmusicnews.com/stories/022608fuzzy> at 28 February 2008
[7] The New York Times, Amazon Gains Share of Shrinking Paid Music Market (17 April 2008) <http://bits.blogs.nytimes.com/2008/04/17/amazon-gains-share-of-shrinking-paid-music-market/> at 12 May 2008; The Register, Amazon to take mp3 downloads international (28 January 2008) <http://www.reghardware.co.uk/2008/01/28/amazon_mp3_rollout_this_year/> at 12 November 2008; Digital Music News, It's Official: Sony BMG Delivers MP3s to Amazon (10 January 2008) <http://www.digitalmusicnews.com/stories/011008sony> at 20 January 2008; Digital Music News, Amazon Hits Trifecta: 3 Million Catalog, 3 Major Labels (28 December 2007) <http://www.digitalmusicnews.com/stories/122807wmg_3> at 11 January 2007
[8] The New York Times, Amazon Gains Share of Shrinking Paid Music Market (17 April 2008) <http://bits.blogs.nytimes.com/2008/04/17/amazon-gains-share-of-shrinking-paid-music-market/> at 12 May 2008
[9] Digital Music News, Wal-Mart Reaffirms Commitment to MP3s; Standoff Continues (7 April 2008) <http://www.digitalmusicnews.com/stories/040608walmart> at 8 April 2008; Digital Music News, Developing: Sony BMG, Warner Music Downloads Missing at Wal-Mart (4 April 2008) <http://www.digitalmusicnews.com/stories/040308wal-mart> at 8 April 2008
[10] ZeroPaid, Limewire Opens Music Store (20 March 2008) <http://www.zeropaid.com/news/9339/Limewire+Opens+Music+Store> at 22 March 2008; Digital Music News, LimeWire Keeps Legit Flame Alive, Taps Redeye Content (22 February 2008) <http://www.digitalmusicnews.com/stories/022108limewire> at 25 February 2008
[11] Slyck, Limewire Opens Music Store (18 March 2008) <http://www.slyck.com/story1678_Limewire_Opens_Music_Store> at 27 March 2008
[12] TechDirt, Exclusive Live Recordings From... LimeWire? (9 July 2008) <http://www.digitalmusicnews.com/stories/070908limewire> at 15 July 2008
[13] Digital Music News, LimeWire Store Starts Bearing Fruit; DRM-Free Catalog Appears (19 March 2008) <http://www.digitalmusicnews.com/stories/031808limewire> at 23 March 2008; ZeroPaid, Limewire Opens Music Store (20 March 2008) <http://www.zeropaid.com/news/9339/Limewire+Opens+Music+Store> at 22 March 2008
[14] ArsTechnica, EMI's planned EMI-only music store misses the point (8 October 2008) <http://arstechnica.com/news.ars/post/20081008-emis-planned-emi-only-music-store-misses-the-point.html> at 10 October 2008; TechDirt, EMI Sets Up Its Own Online Store As YouTube Tries Selling Music (8 October 2008) <http://www.techdirt.com/articles/20081007/2140232485.shtml> at 10 October 2008; Digital Music News, EMI Planning Homegrown Music Destination (9 October 2008) <http://www.digitalmusicnews.com/stories/100808emi> at 10 October 2008
[15] Digital Music News, TLC for TDC? Why a Danish Model Is Getting So Much Attention (20 October 2008) <http://www.digitalmusicnews.com/stories/101708tdc> at 21 October 2008
[16] ZeroPaid, Rhapsody Opens DRM Free Music Store (1 July 2008) <http://www.zeropaid.com/news/9599/Rhapsody+Opens+DRM-Free+Music+Store> at 4 July 2008
[17] ZeroPaid, Rhapsody Opens DRM Free Music Store (1 July 2008) <http://www.zeropaid.com/news/9599/Rhapsody+Opens+DRM-Free+Music+Store> at 4 July 2008
[18] Digital Music News, TLC for TDC? Why a Danish Model Is Getting So Much Attention (20 October 2008) <http://www.digitalmusicnews.com/stories/101708tdc> at 21 October 2008; ZeroPaid, Napster Comes Full Circle, Launches DRM-Free mp3 Store (22 May 2008) <http://www.zeropaid.com/news/9509/Napster+Comes+Full+Circle%2C+Launches+DRM-Free+MP3+Store> at 5 June 2008; The Register, Napster Looks to De-Tether Downloads (7 January 2008) <http://www.theregister.co.uk/2008/01/07/napster_mp3/> at 8 January 2008
[19] Digital Music News, Napster Goes DRM-Free on Downloads, MP3s Ahead (3 January 2008) <http://www.digitalmusicnews.com/stories/010607napster> at 11 January 2008; ZeroPaid, Napster Comes Full Circle, Launches DRM-Free mp3 Store (22 May 2008) <http://www.zeropaid.com/news/9509/Napster+Comes+Full+Circle%2C+Launches+DRM-Free+MP3+Store> at 5 June 2008
[20] ZeroPaid, Napster Comes Full Circle, Launches DRM-Free mp3 Store (22 May 2008) <http://www.zeropaid.com/news/9509/Napster+Comes+Full+Circle%2C+Launches+DRM-Free+MP3+Store> at 5 June 2008
[21] AFP, YouTube links to online stores in money-making move (8 October 2008) <http://afp.google.com/article/ALeqM5jRxMsYH4iZreyrPK_Pr4-8M30RJQ> at 10 October 2008; TechDirt, EMI Sets Up Its Own Online Store As YouTube Tries Selling Music (8 October 2008) <http://www.techdirt.com/articles/20081007/2140232485.shtml> at 10 October 2008; Digital Music News, YouTube Trying eCommerce; iTunes, Amazon On Board (8 October 2008) <http://www.digitalmusicnews.com/stories/100708youtube> at 10 October 2008
[22] Digital Music News, YouTube Trying eCommerce; iTunes, Amazon On Board (8 October 2008) <http://www.digitalmusicnews.com/stories/100708youtube> at 10 October 2008
[23] washingtonpost, Yahoo to open music to other services (11 September 2008) <http://www.washingtonpost.com/wp-dyn/content/article/2008/09/11/AR2008091101997.html>a t 14 September 2008; Digital Music News, Yahoo Music Starts Opening Up; Early Blueprints Revealed (12 September 2008) <http://www.digitalmusicnews.com/stories/091008yahoo> at 14 September 2008
[24] Siliconvalley.com/Associated Press, Berkeley-based music site gives fans a cut of tune sales (3 September 2008) <http://www.siliconvalley.com/news/ci_10370690> at 5 September 2008
[25] Siliconvalley.com/Associated Press, Berkeley-based music site gives fans a cut of tune sales (3 September 2008) <http://www.siliconvalley.com/news/ci_10370690> at 5 September 2008
[26] Digital Music News, More WaWaWa... $0.03 Per Download? (5 August 2008) <http://www.digitalmusicnews.com/stories/080408wawawa> at 7 August 2008; SiliconValley/Associated Press, Digital music service debuts in China (2 August 2008) <http://www.siliconvalley.com/news/ci_10077331> at 6 August 2008
[27] Digital Music News, TLC for TDC? Why a Danish Model Is Getting So Much Attention (20 October 2008) <http://www.digitalmusicnews.com/stories/101708tdc> at 21 October 2008