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Music Fans Starting to Tune In to Fee-Based Sites

Ex-file sharers like the bigger, more reliable libraries. But the labels have a long way to go.

September 21, 2003|Jon Healey | Times Staff Writer

Jim Goodall knew it was illegal. But when the occasional craving for music struck, the 37-year-old graduate student helped himself to free songs on Internet file-sharing networks.

Then friends introduced Goodall to Rhapsody, an online service authorized by the record labels. Now, Rhapsody is the main source of music in his Santa Monica home. And file sharing? "I don't even think about it."

For the music industry, that's one down, 59,999,999 to go.

Goodall and about half a million other Americans pay $5 to $10 a month for services giving them access to a large online library of digital songs. By comparison, an estimated 60 million people in the United States tap Kazaa and other free file-sharing networks, which have mushroomed in popularity since they debuted in 1999.

That disparity, some critics say, shows how the recording industry blew its chance to capitalize on the online music revolution. As record labels and music publishers were releasing their works to fee-based services such as Rhapsody in fits and starts, people were moving at warp speed to unauthorized networks, including Napster and Kazaa, that let them copy songs free from other users' computers.

Still, the slowly growing ranks of converts such as Goodall underscore a key point: The revolution isn't solely about free songs. It's also about having entree to a vast, reliable collection of recorded music that isn't controlled by radio programmers, record-store stockers or major-label executives.

For Goodall, those benefits had more to do with his conversion from pirate to paying customer than moral qualms or fears about getting caught in the music industry's legal dragnet. Simply put, he thinks Rhapsody is worth the $10 he pays each month.

"I didn't find on the free services that they led me or tweaked my curiosity very much," said Goodall, who is studying social welfare at UCLA. With Rhapsody, "I'm introducing myself to tons of music because it's so easy."

He often starts by navigating to the electronic-music section of Rhapsody and entering the portion devoted to a musical subgenre called downtempo. The Rhapsody software suggests a few artists and albums, and Goodall picks a song to sample. If he likes it, he follows the links provided to the whole album, that musical genre or a related radio station, which will lead him to other artists to explore.

That kind of experience is something more and more people are willing to pay for, despite the limitations of services such as RealNetworks Inc.'s Rhapsody, AOL Time Warner Inc.'s AOL MusicNet and Roxio Inc.'s Pressplay. For music fans who want to download songs without paying a monthly fee, a host of companies are preparing to sell individual tracks through online stores such as Apple Computer Inc.'s iTunes Music Store.

The music industry shouldn't celebrate yet. Only lightly advertised, the authorized services are likely to generate less than $80 million in revenue this year, Jupiter Research has predicted. That's less than 1% of what the record industry collected from CDs in 2002. And like file-sharing networks, subscription services are attracting consumers with a proposition -- an unlimited amount of music for a flat monthly fee -- that undermines the CD market, which has been the industry's bread and butter.

But at the same time, the services are teaching the industry a valuable lesson. As they evolve and start building meaningful audiences, they are showing what it will take in the digital era to get music fans to part with their money.

The subscription services -- which also include MusicNow from FullAudio Corp., RadioMX Platinum from MusicMatch Inc. and Streamwaves from Streamwaves Inc. -- all take the same basic approach. Subscribers can listen to as many songs as they want from an enormous and steadily growing library of songs. In Rhapsody's, there are more than 380,000 tracks from 28,000 albums on 180 record labels.

There are two significant restrictions. First, subscribers lose the ability to play those songs if they stop paying the monthly fees. And for now, at least, they can play them only on a computer, not on a car stereo or a portable device. If they want music that won't expire after their subscription lapses, or if they want to move it to a portable player, they have to pay 79 cents or more per track.

File-sharing networks have the advantage of a wider selection, offering just about anything that has ever been on CD, a plethora of unreleased live and bootlegged recordings and a vast collection of older songs. None of those songs expire, and all can be copied freely to CDs or portable devices.

But file sharing isn't a perfect way to obtain music either. When users search for files, they're often presented with a disorganized jumble of tracks peppered with bogus or inaccurately labeled files and low-quality recordings.

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