Starting to get it.

It’s finally starting to happen: Technology companies are waking up to the opportunities opened by the music industry’s steadfast refusal to embrace online distribution of music files. First, Apple opens its iTunes Music Store with a simple proposition: 99 cents per song with a catalog of 200,000 tunes. There are limits on what you can do with the downloaded files, and they use a not-yet-ubiquitous file format (AAC instead of MP3), but in general their policies are pretty liberal. Besides, they’re Apple.

Today, Real Networks opens a competing store called RealOne Rhapsody that will sell each of its 325,000 songs for 79 cents apiece. Real is in the process of buying Listen.com, which is parent to Rhapsody, so maybe this is their plan to breathe a little life into the so-far-anemic service. Next, expect Pressplay, just bought by Roxio, to try a similar tack.

What to watch for here: A price war, followed by an effort among warring online music retailers to keep their costs low. One way they can do that is by piggybacking on existing music distribution networks. Instead of building a huge, central server farm, as Apple has done, why not use a distributed network that’s already in place, like KaZaA, or Morpheus? These services are increasingly moving towards an infrastructure that will support online transactions and that will give distributors the ability to limit access to their servers, if not to copies of their files.

My prediction: Within the next year or so, you’ll pay 10-25 cents per track to download songs from a preferred server via KaZaA or some other existing P2P network. What you’ll get is a higher quality digital file that’s guaranteed not to be bogus, and a fast download time, plus fairly liberal limits on what you can do with that file. There will be some kind of digital rights management but it won’t be excessive. And people will flock to a service like this.

Starting to get it.

2 thoughts on “Starting to get it.

  1. I’d like to see more evidence that any true P2P network could support reliable transactions or guarantee file integrity. What about guaranteeing download speeds? (person I’m download from might be on dialup, and might disconnect halfway through). And I download a DRM’d file from someone, how do the rights get transferred to me if I purchase? (the original owner’s DRM data is already embedded in the file).

    Although… the more I think about it… the altnet logo probaboly means the file is NOT on a random person’s machine but living on alnet servers. Thus DRM control is still under their control.

    Your prediction sounds spot-on to me.

  2. Scot — the problems you point out are exactly what’s wrong with P2P networks today. The person you’re downloading from might have a dialup connection, not enough bandwidth to support all the connections to her machine, or she might have (wittingly or no) posted a bogus or low-quality file. That’s exactly the need that the record companies can address, by using big, beefy servers with T3 lines as, in essence, “super-peers” on Kazaa. Connect to one of those machines, and you know you’ll get a good-quality file and be able to download it quickly and easily. The trick for the record companies: Being able to provide gated access, through the Kazaa client, to these “super-peers,” so that only their subscribers / purchasers can connect.

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