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Online Music Services Don't Impress Insiders

Welcome to 2002: The Year of the Living Dangerously. For the record labels that is. The major labels took their sweet time and finally rolled out Pressplay and MusicNet, online music subscription services, as 2001 came to an end. The reaction thus far has been, in a word, blah. And the reaction I am talking about is not coming from consumers, it is coming from inside the industry.

“The services are useless right now,” one major label executive told me. “Unless we crush file-swapping, we’ll fail online. And if that happens the industry will have to rethink its strategy beginning at the pressing plants.”

While those words seem harsh, another major label executive chimed in with even harsher words.

“I bought my kids a subscription to both services but they’re still using KaZaA. My son told me that KaZaA is easier to use and offers faster downloads. My daughter was more blunt. ‘They suck,’ she told me.”

Kids say the darndest things.

Some in the industry speculate that Real Networks and Microsoft, the two software companies powering the competing services, are dictating the strategies for Pressplay and MusicNet.

“There is no downside for them,” a tech savvy industry insider told me. “If [Pressplay and MusicNet] fail it won’t impact their businesses. But our asses are on the line.”

Another insider said he felt that the labels input was being ignored because “we’re considered stupid media people by the techies.”

While neither service has launched full-scale marketing campaigns, insiders worry that marketing will further alienate fans.

“We’re asking people to change the way they’ve been using the Internet when it comes to music. It’s not as simple as saying, ‘Ok, we now have compact discs and they offer better music quality so stop buying cassettes.’ How do you market a fee-based service that competes with free services and offers nothing new or even better?” a long-time marketing executive at a major label told me.

Indeed, neither service appears to offer anything that can’t be found on KaZaA, Audio Galaxy and other peer-to-peer services. While offering music fans downloads, streams and “burnability” in legitimized environment, the services are devoid of anything worthy of note.

For Pressplay and MusicNet to be successful, the labels will have to work closely with partners to build specialized services that offer “inclusion.”

“The music fan loves to feel like a part of the scene. They love to feel included,” the marketing maestro told me. “If we stream concerts, that’s a plus. If we offer subscribers special ticket prices or unreleased CDs, that’s a plus. We need to offer [music fans] something that they do not have access to and can’t easily obtain access to.”

Pressplay and MusicNet could be successful, according to most of the industry people I spoke to. But it will take time, money and some forward thinking.

“The music industry has alienated its consumer base,” a major label executive told me. “We need to befriend them again.”

Good luck.

Ben Silverman is the editor of DotcomScoop.com, a daily news publication covering the Internet, technology, telecommunications and media sectors. He formerly owned and operated an independent record label and artist management firm and covered the music industry for various online publications. He can be reached at [email protected].

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