Digital music store

For a store that sells musical instruments and related equipment online, seeMusic store

Sales from the onlineiTunesmusic store, operated byApple Inc.

Adigital music storeis a business that sellsdigital audio filesofmusic recordingsover theInternet.Customers gain ownership of a license to use the files, in contrast to amusic streaming service,where they listen to recordings without gaining ownership. Customers pay either for each recording or on asubscriptionbasis.Onlinemusic stores generally also offer partial streaming previews of songs, with some songs even available for full length listening. They typically show a picture of the album art or of the performer or band for each song. Some online music stores also sell recorded speech files, such aspodcasts,and video files ofmovies.

History

Early years

The first free,high-fidelityonline music archive of downloadable songs on the Internet was theInternet Underground Music Archive(IUMA),which was started by Rob Lord, Jeff Patterson and Jon Luini from theUniversity of California, Santa Cruzin 1993.Sony Music Entertainment Japanlaunched the first digital music store in Japan on 20 December 1999, entitled Bitmusic, which initially focused onA-sidesof singles released by Japanese domestic musicians.

The realization of the market for downloadable music grew widespread with the development ofNapster,a music andfile sharingservice created byShawn Fanningthat made a major impact on the Internet scene in 2000. Some services havetethereddownloads, meaning that playing songs requires an active membership. Napster was founded as a pioneeringpeer-to-peer (P2P) file sharingInternet service that emphasized sharing audio files, typically music, encoded inMP3format. The original company ran into legal difficulties overcopyright infringement,ceased operations and was eventually acquired byRoxio.In its second incarnation Napster became an online music store untilRhapsodyacquired it fromBest Buyon 1 December 2011. Later companies and projects successfully followed its P2P file sharing example such asGnutella,Freenet,Kazaa,Bearshare, and many others. Some services, likeLimeWire,Scour,Grokster,Madster,andeDonkey2000,were brought down or changed due to similar circumstances.

In 2000,Factory RecordsentrepreneurTony Wilsonand his business partners launched an early online music store, Music33, which sold MP3s for 33penceper song.

The major record labels eventually decided to launch their own online stores, allowing them more direct control over costs and pricing and more control over the presentation and packaging of songs and albums.Sony Music Entertainment's service did not do as well as was hoped. Many consumers felt the service was difficult to navigate and use. Sony's pricing of US$3.50 per song track also discouraged many early adopters of the service. Furthermore, asMP3 Newswirepointed out in its review of the service, users were actually only renting the tracks for that $3.50, because the patron did not own the audio file. After a certain point the files expired and could not be played again without repurchase. The service quickly failed.

Undaunted, the record industry tried again.Universal Music Groupand Sony Music Entertainment teamed up with a service called Duet, later renamedpressplay.EMI,AOL/Time WarnerandBertelsmann Music Groupteamed up with MusicNet. Again, both services struggled, hampered by high prices and heavy limitations on how downloaded files could be used once paid for.In the end, consumers chose instead to download music using illegal, free file sharing programs, which many consumers felt were more convenient and easier to use.

Non-major label services likeeMusic,Cductiveand Listen.com (now Rhapsody) sold the music of independent labels and artists. The demand fordigital audiodownloading skyrocketed after the launch ofApple'siTunes Store(then callediTunes Music Store) in April 2003 and the creation of portable music anddigital audio playerssuch as theiPod.These players enabled music fans to carry their music with them, wherever they went.

Amazonlaunched itsAmazon MP3service for the US in September 2007, expanding it gradually to most countries where Amazon operates.

Rise

An increasing number of new services appeared in the 2000s that enabled musicians to sell their musicdirectly to fanswithout an intermediary. These type of services usually usee-commerce-enabledweb widgetsthat embed into many types of web pages. This turns each web page into the musician's own online music store. Furthermore, there had been a boom in "boutique" music stores that cater to specific audiences.

On October 10, 2007, English rock bandRadioheadreleased the albumIn Rainbowsas a download. Listeners were allowed to purchase the album for whatever price they wanted to pay, legally allowing them to download the album for free. About one-third of people who downloaded the album paid nothing, with the average price paid being £4. After three months online the album was taken down by the band and released on compact disc (CD). As of April 2008,the largest online music store was theiTunes Store,with around 80% of the market.On 3 April 2008, the iTunes Store surpassedWal-Martas the biggest music retailer in the United States, a milestone in the music industry as it was the first time in history that an online music retailer exceeded those of physical music formats (e.g.,record shopsselling CDs).

In the early 2010s, online music stores—especially iTunes—experienced a marked increase in sales.Consumer spendingshifted away from the purchase of CDs in favor of purchasing albums from online music stores, or more commonly, purchasing individual songs. The iTunes platform has been the main reason for this shift, as it originally sold every song in its library for 99 cents. Historically, albums would be sold for about five times the cost of a single, but iTunes was selling every song for a tenth of the price of an album. However, in order to increase album sales, iTunes instituted "Complete My Album", which offered a discounted price on the full album when a consumer had already purchased one or more songs. Furthermore, with the rising popularity ofCyber Monday,online music stores have further gained ground over other music distribution sources.

iTunes rolled out anInstant Gratification(instant grat) service, in which some individual tracks orbonus trackswere made available to customers who have pre-ordered albums.The instant-grat tracks have changed the criteria for the UKOfficial Charts's singles. In 2013,David Bowie's "Where Are We Now?"was not allowed to chart because it was a pre-order for the albumThe Next Day,but Official Charts later ruled that effective February 10, 2013, certain instant grats could be allowed to appear in the Top 40.Instant grats have also been offered on other online music stores including Amazon and Spotify.

Compared to file sharing

Much controversy surroundsfile sharing,so many of these points are disputed.

Advantages of legal online stores

• The sale of licensed content adheres tocopyright laws
• More consistent and higher-quality metadata, because the entering of the metadata is more centralized and done with more oversight.
• Music download companies are more accountable to users than creators of file-sharing programs
• A centralized repository of music makes it easier to find the songs you want.
• Notably, Apple Computer CEOSteve Jobsclaimed in his introduction of theiTunes Storethat downloading from file-sharers is theoretically working for less than minimum wage - "By spending an hour of your time to save less than four dollars, he calculated, 'you're working for less than minimum wage!'".

Disadvantages of online stores

• Many major online music stores only offer music in one audio format.
• Most online music stores sell music encoded in alossy file format,compared to an audio CD. For the most part, music that is sold in lossy MP3 format is not sold at higher bit rate encoding.
• Few online music stores offer music in lossless, metadata-enabled formats such asFLACorALAC,but instead stick toWAVfiles in which no metadata can generally be embedded.AIFFfiles with metadata are offered but in larger size files than FLAC or ALAC without advantage in sound quality. In contrast, lossless rips of CDs in FLAC format are widely available on the web for illegal downloading.
• Some stores usedigital rights managementtechnology, which limits the use of music files on certain devices. The restrictions vary between different services, and sometimes even between different songs from the same service.
• Online stores charge for downloading songs and other content, whereas illegal file sharing does not have any fees (although illegal song downloaders may face fines and prosecution in some jurisdictions and illegal files may containcomputer viruses)

Internet radio

Online music stores receive competition from online radio, as well as file sharing. Online radio is the free distribution of webcasts on the Internet via streaming. Listeners can create customizable "stations" based on a genre, artists, or song of their choice. Notable Internet Radio service providers arePandora,Last FMand recentlySpotify,with Pandora being the largest. Pandora holds 52% of the market share in Internet radio, with over 53 million registered users and almost one billion stations from which users can choose.

See also

• Comparison of digital music stores
• Music industry
• Open Music Model
• InMusic

External links

• Off Book: The Evolution of Music OnlineDocumentary produced byOff Book (web series)