For decades, Apple Computer made money by effectively exploiting a niche market. Today, however, while the company still has a relatively small market share in the computer industry, it utterly dominates the digital music space, with over 70 percent of all online music sales. So how can new services and small players compete against the Cupertino, California behemoth? Some believe it can be done by exploiting the niches, and offering consumers more freedom.
Musica360, a new online digital music download service, set to launch in September, that focuses on Latin music. Like AudioLunchbox, which focuses on Indie pop and rock; eMusic, that focuses on independent acts and live music; and IndieHeaven, which focuses on independent Christian Music, Musica360 sees a way to compete by offering a specialized service focusing on areas where the major players aren’t competitive.
Filling In the Niches
“I think for the little guy to be able to compete you have to have a niche focus, a niche market. There’s no way for us to compete with iTunes Music Store on a broad scope,” says Musica360’s Christopher English. “So let’s take one thing and do it really well. And what we do is Latin music.”
Site founders English and Jenny and Josephine Garcia, are all industry players, with backgrounds at Clear Channel, the now defunct Latin music site CalienteJams.com, and in the music press. Although they say that the site will have both major label and independent music, the focus is going to be on smaller acts.
“It’s easier to get deals with the indie artists. The major labels are only going with the big services, like iTunes and Napster,” says English. “There’s a whole independent community out there that can’t get their music heard. The majors are going to spend the money, and can get their records heard. The indie music might be just as good, but they don’t have the money to get the record heard. I hope to be able to do that, by promoting the music and the artists in interviews and articles as well.”
Although Musica360 will launch with U.S. acts only, it hopes to expand to other areas, such as Cuba, Puerto Rico, and the Dominican Republic. “There’s a lot of talent in the Dominican Republic right now,” says Jenny Garcia, “and they need help getting their music out over here.” The company has no immediate plans to expand into other genres.
Download prices feel familiar, $.99 per song, $9.99 per album, or a $5 per month
Weed File subscription plan that will allow users to play songs three times before being prompted to buy the track (for an additional $.79). Currently, Weed is a Windows-only file format. However it’s worth noting that the Weed FAQ expects Mac support, at least in beta, “
by the end of May 2005.” Weed files will not play on an iPod.
Yet unlike the big vendors—the iTunes Music Store (iTMS), Napster, Rhapsody, and Yahoo! Music Unlimited—Musica 360 is focusing on selling MP3s, free of any sort of
Digital Rights Management (DRM) scheme (sometimes called “digital restrictions management”). DRM technology is intended to prevent purchasers from sharing music.
English says he looked into DRM, but for a small independent music service, there’s no good alternative to both protect songs, and still reach a wide audience.
“DRM is a little too restrictive now. Right now the most popular music player is iTunes, If I had to license a DRM I’d license [Apple’s] Fairplay. But Apple doesn’t license their DRM. If they wouldn’t give it to somebody like Real Networks, little Joe Schmoe definitely won’t get it,” says English. “I looked into a couple of DRMs but the only one you can really license is Windows Media, and you can’t play that on the iPod. I’ve even looked in to open source DRMs, but it wasn’t broad enough to use on all the players.”
He argues, convincingly, that the lack of a DRM doesn’t leave artists any more exposed than they already are with compact discs. “What we tell the artists is that if you’re selling the CD, it is the same risk as selling the MP3. A person can take the CD and do what they want with it anyway, no different than an MP3.”
If Musica360 can make it, and services such as eMusic and AudioLunchbox continue to stay alive, look for other niche players to emerge. This also will translate into more choices for consumers, to which we say, Bienvenidos .
Mathew Honan covers digital audio for Playlist. His work has also appeared in Macworld, Wired, Time, and Salon.