Deja Vu - Physical Retailer (Best Buy) buys Digital Music Provider (Napster)

Image via Wikipedia What's old is new again, eh? News just broke that Best Buy purchased Napster for $121 Million. Congrats to Napster for finding an exit, but I'm not all that bullish on the prospects for Best Buy to be successful with this. This has been tried numerous times in the past by physical retailers, without one highlight coming to mind. The one I am most familiar with was Circuit City's purchase of MusicNow several years ago, only to see Circuit City (re)sell it to AOL (for cheap) after being unable to capitalize on it.

I've spent all of 10 minutes thinking about the implications of this, but I'll start with these knee-jerk reactions:

• Yet another subscription model disappears... do you want a subscription relationship with a retailer? I don't. I'm not sure why I find this so unappealing when I have subscription relationships with many (less trusted) companies than big box retailers, but it just doesn't *seem* right to me.
• Would Best Buy consider selling off the subscribers to Rhapsody and just focus on selling DRM-free MP3s? Perhaps... that's an easier sell to their current customers. Buy and iPod at Best Buy and get 10 free MP3s? That could actually be a pretty interesting conversion strategy.
  
• Most consumers have relationships with a digital goods provider right now (e.g. Apple) and I don't see an incentive for them to switch. Granted, Amazon has been successful in selling both physical and digital goods, but I think they are the exception not the rule. Although, I'm thinking that Best Buy sees the digital platform giving them the ability to more proactively push digital commerce affiliate relationships with "click to buy" MP3 links that are meant to compete with Amazon's and iTunes.

I'm sure my thoughts will continue to evolve on this over the next day or so, but what is for certain is that the digital music space continues to have more rehashed storylines and drama than your average daytime soap opera...

Related articles by Zemanta

• Napster's Descent Continues as Paid Subscribers Drop 6.8%
• Napster going DRM-free
• Napster Launches a New Web-Based Version of Subscription Service
• Best Buy to Acquire Napster for $121 Million
• iTunes Remains Top US Music Retailer

RocketSurgeon & the Brain Scientists

I'm guessing that most of you that read my blog are also very familiar with the posts and directory of RocketSurgeon. What most people probably don't know is that RocketSurgeon (aka Jadam Kahn) and I worked together on the music service formerly known as MusicNow (aka AOL Music Now or more commonly..."the service AOL shot in the head because they could make a quick buck by selling off the subscribers to Napster").

Well, I'm excited to say that (some of) the band is getting back together... Jadam and I are now working together again on the next generation of MyStrands products and services.

I've heard from a number of people who have been watching the activity at MyStrands ask, "what the hell are you guys working on"? Usually right before or after the reference to the recent $25 million round of funding we raised this summer and the stable of Ph.Ds we have squirreled away in various corners of the world.

Well, of course I can't tell you that, but we are very excited about the stuff we've got cooking, and it won't be long before we give you all a whiff. :-)

Rhapsody and Urge Merge

Big news. The subscription music consolidation continues with MTV rolling it's over-hyped under-delivering subscription service, Urge, in with Real's Rhapsody service - this follows Napster's acquisition last year of both Virgin Digital and AOL Music Now's subscribers.

Free Article - WSJ.com: "In a bid to create a stronger competitor to Apple Inc.'s market-dominating iTunes Store, Viacom Inc.'s MTV Networks is set to announce today that it is merging its online digital-music offerings into a joint venture with RealNetworks Inc., the company behind the Rhapsody subscription digital-music service, according to people familiar with the matter."

A couple of more moves are needed until Real has got a realistic shot a making a dent in Apple's marketshare.

1. First, the market needs Napster (or at least their customers) to be acquired by Rhapsody too. Then, the market confusion will start to clear a little (iTunes needs one strong competitor, not a bunch of tiny ones) - then they can easily position A vs. B in their marketing messaging.
2. Offer DRM-free a la carte tracks (which they are going to do) - word is that they will be really high bit-rate (upwards of 256kbps) MP3s. Sell them for $1 each.
   
3. Introduce an ad-supported streaming service - with an upsell tier to ad-free listening.
   
4. Partner with every "music 2.0" site out there and syndicate their free play web player - support *lots* of external communities, not just their own - cut affiliate relationships with them all.
   

Now they have a basic value proposition that the market can understand - "we are just like iTunes but instead of 30-second samples you can listen to the whole song". Songs you buy can be imported into iTunes and sync'd with an iPhone (iPod sync is supported by other players, but if you want to sync your contacts/calendar with your iPhone then currently can only do that with iTunes). You also have a great web-based streaming experience that doesn't require a fat media player client.

Over time they could move towards "package" download tiers (like eMusic where you can download x tracks/month). I would personally like that model, but I actually think they should refrain from offering that as it confuses the marketing message. Once people understand it is "just like iTunes only better", then they can move on and try some new models.

All that being said... there is nothing keeping Apple from doing all this themselves if/when the Rhapsody plan started getting some traction.

Fiql Revisited

I haven't talked about Fiql in a while, and thought it was time. For those that have never checked it out, I highly recommend it. To over simplify, think of it as a place where playlists go to mingle, find their mates, and make babies.

Upload a playlist (data not the assets) from your media player, write a description (make it good if you want to get it called out as a "Fiql Pick"), categorize it, and submit. Fiql will then do the work to match the playlist (or as much of it as it can) to both Napster and Rhapsody. Combine that with Napster's 3-free-plays-per-song trial methodology and now you have a playlist that anyone can listen to (at least 3 times). If you are a Rhapsody subscriber, then you can seamlessly listen to playlists from Fiql - or easily export your playlists from Rhapsody into Fiql. Last.fm user? Then leverage Last.fm's webservices to download an XSPF playlist of your Top 50 Played tracks (http://ws.audioscrobbler.com/1.0/user/jherskowitz/toptracks.xspf) to your desktop. Turn around and upload the XSPF file to Fiql, and done. MyStrands user? Even easier, just find a playlist and click "download xspf".

One of the newer additions is that you can also add MP3 URLs for every track in your playlist (click the "link" icon next to the first song and it will run through the MP3s). I created one, check it out:

View this FIQL playlist:Spinner Spins

The beauty of it.... it is completely legal. The artists get paid, the playlisters won't get sued, Fiql makes money from bounties and advertising, and the consumers benefit from a service that acts as a translation layer between playlists - it is media player and media source agnostic. I actually uploaded my Music Now playlists (from Windows Media Player) so I didn't have to go and recreate them in Napster and Rhapsody.

There are lots of other nice (and very slickly designed) features as well... blogs, groups, forums, community/unsigned artist pages, and more.

I have a feeling there is more from where all this came from....

Napster Passes 800K Subs

It seems like Napster's customer acquisition strategy is paying off for them. First they scooped up Virgin Digital's subscribers, then the 300,000+ subscribers that were near and dear to my heart...

Napster Offers Enthusiastic Revenue, Subscriber Snapshot — Digital Music News: "For Napster, the AOL Music Now acquisition helped to transform the subscription total completely."

This puts them out front in the subscriber race, followed by (in my approximation) Rhapsody, Ruckus, Yahoo Music Unlimited and MTV's Urge.

I actually don't think the shakeout is done yet. I'm guessing that we will see some more subscriber fire-sales from companies that don't want to invest anymore money chasing customers.

Washington Post - Developing Selective Hearing

The public consciousness is quickly coming to the realization that all of us writing (and reading this) have known for some time... there's got to more to digital music than the simple pick & buy model of iTunes. The latest to ponder this question, my local read... The Washington Post.

Mike Musgrove - Developing Selective Hearing - washingtonpost.com

My buddy (and former partner in crime at Music Now) Dave Hall shared his thoughts eloquently...

Dear Mr. Musgrove,

You raise some very valid and interesting points about the state of digital music services. You also make a great case for music services that let you and your friends share music, try before you buy, buy what you like, and take it with you.

The most popular services like iTunes offer a straight forward find-and-download approach that satisfies your needs if you know what you are looking for - like a record store.

Though, as you have discovered with your iPod, owning your music (at 20GB you have about 5,000 songs, or $5,000 worth of music) doesn't necessarily mean you have anything to listen to at the moment.

One of the joys of music is that sounds and styles constantly change. People need variety, freshness, a sense of discovery and new things to listen to. Otherwise, no matter how many songs you have, your collection will grow stale.

As I read your article, I couldn't help but think that you were essentially asking for a service like AOL Music Now. Had you tried it, you would have found one of the most addictive and advanced music services available. Sadly, AOL recently shut down this online subscription music service and sold the subscribers to Napster.

At the heart of Music Now was a concept called "taste networking". Taste Networking is similar to a social network, but rather than finding friends through music, Music Now let you find music through friends. By tracking your listening habits - your just played songs, your top artists, your top songs, your top friends (i.e., friends who's music you lisen to most), etc. - and making this information available on a clean, easy to navigate web site, Music Now made it possible to discover great new music.

It also had a great recommendation engine that generated a 2 hour "Daily Mix" of music, specifically tailored to each user, artist and genre.

Using RSS, Music Now would download any portion or all of these charts or playlists and sync them to my portable media player. Whenever a user or Music Now updated a list, the new songs would automatically show up in a the online, PC and device libraries of friends who asked to be updated.

The subscription music element made this all possible. True, the cost was $14.95/mo, the songs were leased, and the music was only available in Windows Media Audio format, thus not available on the iPod. However, in the two years that I used the service I discovered and loved more music than I had in my entire life.

Though I never purchased any songs, I didn't really need to, because I had my own collection of personal radio stations (i.e, the downloaded charts and lists) with me on my portable wherever I went. I was constantly surprised to hear what my buddies were listening to, and many times added those artists and tracks to my own library.

To me, the joy of music is all about hearing what I want to hear when I want to hear it, and finding that new, rare gem that makes me want to listen over and over. Taste networking, subscription music, and Music Now let me do that. My fingers are crossed that some day I will be able to again.

Dave Hall
[Disclosure: I was an employee of AOL and worked on the AOL Music Now service]

The Day the Music (Now) Died

Someone forwarded me this post from a passionate Music Now lover this morning. I can certainly empathize with her dismay and disapppointment with the move of shutting down the service and migrating everyone to Napster... albeit for slightly different reasons.

http://anirazarina.vox.com/library/post/the-day-the-music-died.html


I have waxed poetic about how much I absolutely love AOL MusicNOW. It is was a full-service all-you-can-eat music vendor that allowed you to build playlists and manage your music through a web interface. You could also listen to you music online or download it to your PC/music device to listen without being connected to the intarweb (for a small increase in price). It was the only music service that allowed customized playlists and wouldn't try to foist off crappy artists you had never heard of and didn't like onto your playlist. And, the biggest bonus? It used the intarweb ports and proxies, so I could listen behind the firewall at work.

I, myself, haven't had time to mourn yet.... but it will hit me very shortly. As soon as my licenses expire and I am forced to download another client application (Napster and or Rhapsody) to re-download and sync, I'm sure it will be a painful day.

The comments of the post above also bring out another couple Music Now lovers, with one summing up their thoughts with...

I just want MusicNow back :( About six months ago I turned to Scooter and said "I wonder how AOL will f this one up?" Here's our answer!

No comment.

Internet brands leave music services to experts - Yahoo! News

Internet brands leave music services to experts - Yahoo! News: "...some analysts questioning whether the business is better left to smaller companies specializing solely on running a subscription service, rather than large Internet portals or consumer brands with many other irons in the fire."

This is an interesting story about the subscription music space. They highlight an apparent paradox of the current marketplace.... existing portals and online brands with lots of visitors are having a hell of a time succeeding as a consumer's preferred vendor of music service. Perhaps it is based on consumer perception that the smaller companies are specialists (compared to the big portals' generalist image)? I suppose it's possible... back when I bought CDs, I would go out of my way to go the local record store because I felt like they would better represent my tastes and be more knowledgeable than the 60 year old guy behind the counter at the superstores. I never bought a CD from Walmart or Target... it just didn't seem right to me. Is this the equivalent of what is happening in the online marketplace? Are the portals "not cool enough" for the hardcore music fans? Don't know... but something to think about.

Speaking of specialists vs. generalists, I heard this saying a while ago and it resonated with me:

"A specialist knows more and more about less and less until eventually they know everything about nothing. Conversely, a generalists knows less and less about more and more until he knows nothing about everything."


I'm sure that is somewhat butchered from it's original form, but I still like it.

R.I.P. Music Now, I Will Miss You

Well, this day has been looming over my head for a few months, and unfortunately it has finally arrived. It's like watching your beloved pet slowly dying and you know you are going to have to put it to sleep. You have to keep positive, and enjoy your last days together, knowing that one day it will have to end.

AOL signs Napster as its sole music subscription service - Jan. 12, 2007: "Napster to replace AOL Music Now AOL tells Music Now's 350,000 customers that their accounts will be converted to Napster unless they opt out; transfer should be finished within 60 days."

Napster now has Virgin and AOL's music subscribers (and who knows... maybe more to come). Hopefully they are simultaneously working on a DRM alternative (or better yet, working on a major-label sanctioned DRM-less offering) so that Microsoft's PlaysforSure program's pending demise doesn't leave them out in the cold.

So, where does someone like myself (product lead on Music Now for the last 1 1/2 years) now go for my subscription music service provider? I'm not sure yet. I'm going to start my evaluations (as a consumer) all over again... Napster, Rhapsody, eMusic. iTunes? Nope. I'm sworn off of iTunes and basic a la carte offerings. I love subscription music services, and until Apple offers me one, then I'm going to pursue other providers.

UPDATED COVERAGE FROM NEW YORK TIMES

Buying Guide: Online Music Services (PC Magazine)

http://abcnews.go.com/Technology/ZDM/story?id=2693675

Nice coverage of Music Now, with it being heralded as a "standout service". The conclusion being:

"Unlike its rivals, Music Now requires no client software. All you need is a browser, and you can play any song or playlist in the entire catalog. You can listen at the office, a friend's house, or a Web café as easily as at home. The music videos are a great addition, and the new XM Radio section really rounds out the service. Unfortunately, you don't get remote access to your locally stored music library, and support for the Firefox browser is weak."

Rick's points are valid, but in the meantime if you are looking for remote access to files - I'd suggest checking out the latest build of Winamp, which integrates Orb's great remote access services.

GigaOM » Price Hikes For Yahoo Music

GigaOM » Price Hikes For Yahoo Music: "On November 14, 2006, the cost of a new Yahoo! Music Unlimited subscription will increase from $6.99 to $8.99 per month. Despite this price increase, Yahoo! Music Unlimited will still offer the lowest price of any major subscription music service — now with a catalog of more than 2 million songs!"

Hmmm... Yahoo Music is struggling and Napster is rumored to be up for sale. The winds of change....

Pop-Up Test

Click here to listen to a good Stereophonics tune.

iDon't

iDon't

Join the anti-ipod revolution! I'm not sure how well Sansa's guerilla marketing tactic will work, but I applaude the effort and the wish them the best. Don't get me wrong... I own an iPod. But found that it was like owning a CD player that would only play new CD's purchased from Circuit City (and I often like to shop at Best Buy too). So, now I have a nice portable hard-drive that I use to carry large files and backup data on.

Digital Music News - AOL Music Now Web Services

Digital Music News: "AOL Music Now has just opened a developer suite within its service, allowing any web developer or blogger to grab charts and music information for their own environment. "

AOL Music Now Review: CNET

The good: AOL Music Now makes it simple to listen to your favorite artists or playlists from any Windows PC, and it learns your tastes over time and creates personalized playlists. The browser-based interface means no software to download for basic operation.



Every debuting online music service brings something new to the party, and AOL Music Now is a strong choice for people who work at multiple Windows 2000 or XP PCs. The service is browser based and can remember your personal playlists, so hearing your favorite tunes is as easy as logging on. It's a neat trick that competitor Rhapsody, which also offers a browser-based option, hasn't yet learned.

Read the entire review

Not bad, not great.

InformationWeek | AOL Music Now | AOL's Music Service Has A Good Groove | March 13, 2006

InformationWeek | AOL Music Now | AOL's Music Service Has A Good Groove | March 13, 2006: "AOL's Music Service Has A Good Groove"

This review is a little older than, and not quite as glowing as, the PC Magazine review below, but still solid for a service that is still in "Preview".

Streaming Goodness

So, I was complaining yesterday about the sync errors I was getting with my subscription music content and Windows Mobile 5.0. But, who needs to sync?! I'm continually getting good enough Edge data rates, that I'm able to stream any/all of the 2 million tracks directly to my phone. Using a smartphone RSS reader (like Newsbreak), I can subscribe to any/all of my Music Now feeds - I'm partial to my Daily Playlist - click the link and listen in all 128kbps glory. You will get forced to login to the site (which isn't formatted for display on such a small screen - but you it's not all that bad).

This combined with T-Mobile's all-you-can eat data plan has me wondering... do I even need to sync my songs? I guess when traveling somewhere out of data range (e.g. a plane), but in my normal day to day, I'm not convinced I ever need to sync. More to come...

AOL Music Now review by PC Magazine

AOL Music Now review by PC Magazine

Rick has made a minor misstatement about simultaneous streaming capabilities (multiple PCs can download songs and play them back locally simultaneously - but can not simultaneously stream from the service), but overall a stellar review. He wraps it up very nicely with:

"In the meantime, I'm enjoying Music Now immensely. The ability to access my music from any Web-connected PC is a major benefit, and for about the cost of one CD per month, I can pack my MP3 player to the brim with music. And I don't have to bother with the slow, clunky, and often confusing software that tends to bog down other subscription services. AOL Music Now is so simple to use that virtually anyone can figure it out: As long as you can work a Web browser, accessing the service's mammoth content catalog is a cinch."

New Playlist/Chart Widget

Check it out over in the sidebar, new and improved Music Now javascript chart/playlist widgets (thanks Ted!). If you know how to dig the list ID # out of the service (www.aolmusicnow.com), you too can display to the world what you are listening to.... no fuss, no muss.

Just start with this:




And swap out the id number for the list you want to display and then paste it into the HTML of your page. Enjoy!

New Playlist Alerts via AIM!

Now that I've got Immedi.at working, let the fun begin. Want to get an IM whenever I create a new playlist? Click here!

Perhaps more interesting is the mash-up I created between Music Now, Wists and Immedi.at, where you can subscribe to my album recommendations (see the sidebar to see what they are). Conceptually, every time I add an album recommendation, you would get an AIM with a link to the album within the Music Now catalog. To subscribe to this one, click here.

So far, the IMs seem to take there time getting to you, but I'm guessing the folks at Immedi.at are getting slammed right now with traffic.