Steady Improvement

As we have been reporting, various licensing deals are making the pay digital music services much more competitive with P2P:

A spate of licensing deals this week finally will allow an array of online music companies to offer songs from most or all of the major record labels, setting the stage for them to compete on the features they offer instead of on the limitations of their catalogs.

Analysts say notable shortcomings remain in all the authorized services that could hurt their appeal and stunt innovation. Nevertheless, online music executives say that after two years of scrambling for licenses, they finally have reached the starting line for real competition.

In particular, they say the fights will be over how to package songs, help consumers navigate online collections and extend services from the computer to living room stereos, portable devices and cars. They’ll also vie for partnerships with Internet providers, cable TV companies, retailers and other distributors that can help sell their services.

“There’s a lot of room for experimentation, and I don’t think consumers necessarily know what is the best way to consume online music yet,” said Dave Williams, vice president of product management at Listen.com Inc.

By the end of the week, the subscription music services from MusicNet Inc. and Pressplay are expected to join Listen.com in offering five major record companies’ music as well as songs from large independent labels.

Rival services from FullAudio Corp., MusicMatch Inc. and Streamwaves have deals with all the major labels except those owned by Sony Corp., and they expect to fill that hole by early next year.

Meanwhile, Vivendi Universal subsidiary Emusic offers a subscription downloading service with songs from hundreds of independent labels and older tunes from Universal Music Group.

The companies’ main competition still comes from online pirates, and concerns about piracy dictate many of the licensing terms offered by the labels.

“There’s a fear and skepticism of the digital arena that permeates the music industry,” said analyst Steve Vonder Haar of Interactive Media Strategies, a technology research group. “And that slows innovation by the record labels.”

So far, the company with the most subscribers appears to be MusicMatch, which has more than 100,000, followed by Emusic, which has 70,000.

Although their differences are narrowing with each new deal, online companies offer consumers at least three subscription plans for music: online jukeboxes, sampling services and full-service tools for building music collections. [from LA Times]

There are many drawbacks to P2P including wildly variable quality and download time, no documentation, and the simple knowledge that what you are doing is of dubious legality. As the cliche goes: tap water is almost free but people still buy plenty of bottled water. Give people excellent selection and service and they will pay for digital music.