Two pieces that have caught the eye this week come at the same story but from slightly different angles. Digital Music News reported today that though Apple has passed the 1 billion mark in digital music downloads, the economics of digital downloads still don’t add up. DMN quoted Eric Garland of BigChampagne, who points out that though it makes good PR, compared to peer to peer downloads, iTunes is only a drop in the ocean and that piracy is red herring. The big issue for the music business is the breakdown of the bundled music offering i.e. albums – that’s what’s causing the problems that the music industry is experiencing. Garland says that it’s what comes with the music – liner notes, album art etc that is the area that needs to be addressed to pull people away from P2P.

On the flip side, Yahoo’s David Goldberg, in The Online Reporter, comes to the same conclusion that it’s what comes with the music that’s really going to make the difference, whether that’s video or learning more about the artist or sharing it with friends. As that’s fundamentally Yahoo’s model when it comes to music it’s unsurprising that he says that. Goldberg’s starting point is that music by itself now has no value, so in a music subscription service (where can one find such a thing?) the value comes from the other integrated parts of the service. Roughly, the same conclusion coming from two very different sources is interesting and worth marking IMHO.

Both are saying that it’s what goes on around the music that makes the difference. A sign of the impact of Web 2.0 on music? i.e. the opening up, sharing, add ons and increased activity around what was previously a fairly static experience i.e. buy and listen. We may be on the third wave of digital music services but the collison between digital music’s explosive growth and the changing nature of web applications and tools is going to cause ripples throughout not only the music world but into connected areas as well. For example, people’s expectations of a music radio station are already changing and will become even more marked over the next two years. For digital music service themselves, a long road lies ahead and once again only the fittest (or biggest) will survive.

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