Poor outlook for paid-for online music

Record industry fighting illegal music downloads

As the major record labels prepare to roll out online subscription services, a new report suggests young people are not yet ready to pay to download music from the internet.

Free MP3s will never go away

Ric Dube, Webnoize analyst

Researchers found that 62% would continue to access MP3 music files for free and had no plans to stop.

To compete, the new commercial services would have to offer much more than what people can already get for free, said the report by the digital research company Webnoize.

The findings come as some of the world's largest record labels are just weeks away from launching their own legitimate online subscription services.

They plan to ask music fans for monthly subscription fees in return for access to a big menu of digital, downloadable songs.

Enticing users

"Free MP3s will never go away," said Webnoize analyst Ric Dube, who wrote the report.

"If commercial online music services are to compete with that, they must offer a whole lot more than just a limited number of monthly song downloads."

Webnoize study

3,981 US-based college-aged web users surveyed

20 digital media and technology company executives interviewed

62% of young people plan to continue using peer-to-peer services to download music for free

He said the only way the record companies would be able to compete with free music would be to engage their considerable resources and direct relationships with artists to make online offerings far superior to illegal MP3s.

Webnoize suggested the record labels adopt a tiered approach, offering free material to get them to subscribe and then offer added layers of paid-for services.

It said the emphasis was on the music industry to better serve consumers, by offering exclusive online concerts, access to pre-released songs, discounts for CDs, or early access to concert tickets.

Music industry changing

"We're going to see a fundamental change in certain sorts of artists, what they produce as product," said Mr Dube.

"The hard-copy recording is what the music industry is built on, that is the premise because that is what has been technically feasible over the years.

"Now, with the internet, streaming media, digital technology, you can commercialise a lot more aspects of music than just the hard copy recording," he said.

Two main online music ventures are due to launch in the autumn.

Rival services

MusicNet - backed by RealNetworks, AOL Time Warner's Warner Music Group, EMI Recorded Music and Bertelsmann's BMG Entertainment - is a business-to-business venture, selling both technology and its content to partners.

Its rival Pressplay, owned jointly by Universal Music Group and Sony, is set to launch on Microsoft's MSN, Yahoo and MP3.com, as well as marketing directly to customers, offering a selection of somewhere between 70,000 and 100,000 songs.

The new commercial services are aiming at the gap left by the demise of the online song-swapping service Napster, because of a copyright infringement lawsuit.

At its peak, Napster attracted nearly 80 million users. It is also in the process of reinventing itself as a paid service.