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MusicMatch to Sell Downloadable Music

The online store, which opens today, imposes the fewest limits on copying and portability among legitimate outlets.

September 29, 2003|Jon Healey | Times Staff Writer

Taking a page out of Apple Computer Inc.'s playbook, software maker MusicMatch Inc. is set today to begin offering downloadable songs from the leading record labels with the fewest restrictions so far on copying and portability.

Like Apple, MusicMatch has built a music store into its software for playing CDs and music files on a computer. But the MusicMatch Jukebox software works on PCs running Microsoft Corp.'s Windows, which represent more than 90% of the market. Apple's iTunes works only on Macintosh computers.

San Diego-based MusicMatch isn't the first to offer downloadable songs to Windows users, nor will it be the last. Several companies with more-familiar brand names, including Apple, are expected to open online stores by the end of the year.

But the real competition hasn't been other stores; it's been unauthorized outlets that provide free songs with no limit on copying. By coming closer than any previous Windows-based service to matching that flexibility, MusicMatch is the best test yet of the public's willingness to pay for downloadable music.

The company addresses two of the most common complaints about authorized music services: subscription fees and tight -- and sometimes inconsistent -- restrictions on copying. The new software lets customers buy songs without paying a monthly fee, and the limits on copying are high enough that the average music fan isn't likely to bump into them.

Those terms are likely to be offered soon by others in the market, including BuyMusic Inc. of Aliso Viejo.

Peter D. Csathy, MusicMatch's president, said it took months of negotiations to get the labels to ease and simplify the limits.

A downloadable music store "is DOA when you have complex usage rules," Csathy said. Customers don't want to feel restricted, he said, and "for the first time we're going to be able to deliver that promise."

In the name of fighting piracy, the labels initially insisted that songs sold online be wrapped in electronic locks that prevented them from being moved onto multiple computers, copied onto portable music players or burned onto numerous discs.

Apple made a key breakthrough this year when it prodded the labels to allow Mac users to keep copies of songs on three computers, make unlimited transfers to Apple iPod portable music players and burn as many as 10 CDs with the same set of songs.

Now, MusicMatch's deal -- copying to three computers, transferring to portable music players that handle Microsoft's secure music format and burning as many as 5 CDs with the same set of songs -- is likely to be available to any store aimed at Windows users, said Gary Stiffelman, an attorney representing BuyMusic.

MusicMatch has two significant advantages over potential competitors. Aided by distribution deals with Dell Inc. and other major computer makers, its software has about 40 million registered users. And by building its store into one of the most widely used programs for playing music on a PC, it's in a unique position to personalize and integrate sales into other activities, such as listening to online radio stations or MP3 files.

MusicMatch isn't breaking any new ground on pricing -- it charges 99 cents for individual songs and $9.99 or more for full albums, typical for a downloadable-music service. And some analysts say those prices are too high to lure the masses away from free file-sharing networks such as Kazaa and Gnutella, particularly when the songs cannot be copied or moved freely.

Apple's iTunes Music Store sold 1 million downloadable songs in its first week, but the pace has dropped to half that. The same challenge will confront Music Match and any other online store, analyst Michael McGuire of GartnerG2 said.

"You've got to keep giving people a reason to come back," he said.

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