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Commentary: Online music's theme: "Take Five"

Consumers won't find a compelling offering at any site that serves up only partial catalogs, as opposed to a complete listing from the Big Five record labels.

By P.J. McNealy, Gartner Analyst

Microsoft has already made inroads of sorts with online music distribution.

Music codec (coder/decoder) owners such as Dolby Laboratories, which owns Advance Audio Coding, charge makers of MP3 players licensing fees to let a codec be played. Most MP3 devices play Microsoft's Windows Media Audio. Instead of charging the royalty fee, however, Microsoft gives the codec away for free--a dramatic difference from other codecs (such as RealAudio 8 from RealNetworks) and helps gain adoption of WMA by consumers who rip their own CDs.

In that sense, then, Microsoft has had a hand in digital music distribution for a while. With MSN Music, Microsoft has put down a stake as a front-end music distribution portal. It would like to become the "super aggregator," a site that offers music from the Big Five record labels (BMG, EMI, Sony, Universal and Warner).

However, MSN's offering does not do that. It has many features and functions already available from several other Web sites (for example, and and software packages (MusicMatch 6.0 and RealJukebox). As it stands, MSN Music is compliant with the Digital Millennium Copyright Act, but does not differ significantly from anything else out there.

How does MSN's offering stack up with MusicNet, also announced this week? That is an unfair question; MSN wants to be a distributor, while MusicNet is the back-end aggregator of digital content from three of the Big Five. Perhaps a better comparison would be between what MSN will offer in the second half of this year and RealNetworks' or AOL Time Warner's music offerings. For now, too few details are available about business models, distribution strategies and the like to allow for a good comparison.

Five is the magic number in this game. Gartner believes that consumers will not find a compelling offering at any site--whether at AOL, Napster, RealNetworks or somewhere else--that offers only partial catalogs, not a complete listing from the Big Five. Consumers today can walk into a big record store and find almost any CD; they want the same experience on the Internet.

See news story:
MSN joins Net music skirmishes
If they have to stop and think whether the new Dave Matthews album belongs to MusicNet or Duet, confusion will reign, and digital distribution will be stunted.

(For related commentary on the recent court ruling on the Napster file-sharing service, see registration required.)

Entire contents, Copyright ? 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.