New distribution meets old media

By Mark Gibbs
Network World, 02/05/01

Better late than never, but too little too late: Thomas Middelhoff, Bertelsmann's CEO, announced a second Napster service to go live in June or July to offer music downloads from the BMG catalog for a monthly fee. I quote from Network World last week: "[Frank Sarfeld, senior vice president of the Bertelsmann eCommerce Group] said a survey of 20,000 Napster users conducted in December . . . showed that a majority is willing to pay up to $15 a month for the music download service."

When the BMG-Napster idea was first floated back in November I was high on it, but why has their response been so, well, glacial?

Is this announcement, as it currently stands, a big deal? Well, in my opinion, the announcement is rather less important than some might suggest and certainly less important than I had hoped for.

For a start, the new service won't launch until the middle of the year - a full eight months (at best) since the original announcement. I'm not sure what the intervening time will be used for unless it is to redesign the awful Napster software.

Second, we have no idea what the catalog of downloadable music will include, so we shouldn't get too excited just yet. My money is on it being - at least out of the gate - very limited in both artists and their material. While that's understandable, by the time the first version of the new Napster service is available, BMG-Napster will have missed one of the greatest marketing opportunities of the 21st century.

Why am I being so hard on the undynamic download duo? Because other companies are already out there doing what BMG-Napster could have done had they gotten their acts together faster.

My first poster child for the new sales channel for the old media is SightSound Technologies. SightSound offers full-length movies for download. Although more than half of the catalog consists of "B" movies (pretty good ones at that), they now also have major titles such as "Guinevere" (By the way, the sightsound.com site is a terrific piece of design - very well-organized, very effective, nice to use and good-looking).

Movies on sightsound.com can be rented for one or more days, while others are purchased to "own." The pricing of rentals and purchases is very reasonable (a few dollars), which is as it should be given the company's vastly reduced overhead.

Of course, if you don't have at least cable access, the 200M-byte-plus file size might be daunting. (Note to self: Encourage Gearhead to explain how SightSound manages digital rights to ensure that a rental is, indeed, only for the rental period.)

My second poster child in this market is eMusic.com. EMusic offers unlimited downloads of MP3s that cover all of the genres and range from old recordings to the very latest cuts. The cost of subscribing to this service is $9.99 per month with an annual commitment or $14.99 per month for three months. (The firm also offers downloads at $0.99 per track and $8.99 per album, but that doesn't make much sense to me given the low cost of subscribing.)

I have been very impressed with the eMusic service and the range of music available (I think I've downloaded around a half gigabyte in a month), and although I have yet to purchase anything from sightsound.com, I know I will.

This is what BMG-Napster has to compete against - other companies moving much faster, farther and sooner. It looks like SightSound and eMusic have the lead for now. And that advantage may often dictate who wins. In any event, it will be interesting to watch (and listen).

Distribute your thoughts to nwcolumn@gibbs.com.

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