PAYING DOWNLOADS: MUSIC'S HOTTEST NEW MARKET

On-Line Music Goes From Strength to Strength

Paris 

24/01/2005 - 

Picking up music from the Internet is now a legal activity in France since a number of leading companies launched their own paying download services. This, the music industry hopes, will prove to be a masterstroke, putting an end to one of the greatest threats to its profits: the practice of "peer to peer" (a system whereby music fans share files for free).

Convincing consumers, who are used to music being available over the Internet for free, to start buying their favourite tracks on line is no easy business. But paying downloads could well become the future of the online music industry - and several major companies are willing to take a wager on that! Right now, the stakes are high and the competition fierce in this newly emerging sector where companies have yet to show a profit. Given the huge slump in record sales, which has affected markets worldwide over the past few years, a multitude of paying download services have been launched in France – all of them within the past six months and all of them looking to emulate the success story of Apple's online music store iTunes.

Apple's iTunes concept was launched in the U.S. in April 2003 but only arrived in France in June 2004. Since then French companies have looked to it as a blueprint for paying downloads. With a catalogue featuring 500,000 songs from four major record companies (Universal, Sony/BMG, EMI/Virgin and Warner Music) and a host of independent labels, Apple's service offers cyber music fans the chance to download a single (at a cost of 0.99 euros) or an album (for 9.99 euros). Apple, who rapidly became the market leader in this new sector, managed to impose tariffs which the majority of its competitors were then forced to align themselves with. And the Apple success story continues. iTunes now controls almost 70% of the paying download market worldwide and recently set an impressive record, reporting downloaded songs had now topped 20 million. Apple intends to keep its monopoly, too, and one of its trump cards in the market is the iPod, a portable music player (currently enjoying exponential sales) which is only designed to read music files downloaded from iTunes.

Attracting consumers

While it was Universal who pioneered the concept of legal music downloading with the creation of its paying download service in 2001, Sony arrived on the French market in July 2004 offering its own service, Connect. In September 2004, online music stores opened on fnacmusic.com and virginmega.fr, and were followed three months later by the creation of similar services on m6music.fr and coramusic.fr Meanwhile, the principal Internet service providers in Europe – namely, Wanadoo, Tiscali, MSN, Alapage, Packard Bell and Numéricâble – cottoned onto the music trend and pioneered their own legal download service via OD2 (On Demand Distribution), a company co-founded by singer Peter Gabriel.

The trend looks set to continue in France in 2005 as well, with the launch of MTV.fr, Europe2.fr and MCM.net in the first quarter. Napster (which now enjoys legal status) will also be entering the fray and has already thrown down the gauntlet, announcing the creation of a service offered at a price it has defied competitors to beat. In the U.S. Napster gives users access to its entire catalogue for a mere 15 dollars a month. In fact, the music files users download are not actually purchased as such, but hired for the duration of the subscription (and, in theory, would no longer be accessible if a user chose to cancel his/her subscription).

Fnac, which prides itself on running the biggest record store in Paris (at the Forum des Halles), is setting its sights high in terms of music downloading from fnacmusic.com, aiming for 1.2 million downloads. In an effort to mark itself out from market rivals – and encourage download novices to cross the virtual frontier – Fnac has created a series of musical selections and playlists on line and launched its own loyalty card (selling pre-paid download cards in its record stores). Up until now, the top-selling artists on the Fnac website have differed little from those in terms of in-store record sales. On the world music front, Johnny Clegg, Amadou & Mariam and Cape Verdean diva Cesaria Evora are currently in the top three.

Meanwhile, virginmega.fr (Fnac's direct rival) reported that users had downloaded 500,000 tracks from its site in December 2004. Virgin's slick and ergonomic service has instituted its own loyalty drive, rewarding users with one free track for every 20 euros spent on downloading. As for coramusic.fr, this site has followed the example of Fnac and Napster in the U.S., selling prepaid cards in record stores. Parents can also fork out and buy downloading 'credits' for their offspring (without disclosing their precious pin numbers!) What's more, an increasing number of labels are offering consumers the possibility of downloading their artists directly via a number of paying services available on the site promusicfrance.com

If this trend develops as predicted, this new method of buying music on line could account for almost 20% of the market in five years' time. This is enough to make record companies sit up and take notice and incite singers and musicians to throw their weight behind the campaign against Internet piracy. Indeed, Calogero, Garou, Renaud, Zazie and a number of other big-name artists have all lent their support to the recent poster campaign "Téléchargez-moi légalement" (Download me legally) A clear warning to those who persist in downloading their music for free that they could end up with a court case as a result of their record collection!

 The ten most popular downloads in France:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sources: fnacmusic.com, virginmusic.com, OD2 (Wanadoo, Alapage, M6music, Tiscali, MSN, NC Numéricâble, Packard Bell, Coramusic)

Margot  Seban

Translation : Julie  Street