As the early buzz over new music services such as Apple Computer"s iTunes fades, record labels and technology companies are struggling to turn the services into profitable businesses.
Speaking at the iHollywood Forum"s Music 2.0 conference in Los Angeles Monday, executives on both sides focused on the 99-cent price tag that has become the market"s standard for downloadable music. Critics say that that price needs to come down if mainstream consumers are to start buying in large numbers, making the Internet a serious factor in the record industry"s bottom line. Record labels say they can"t afford to go lower. "There"s very little money in this to begin with," said David Ring, vice president of Universal Music Group"s eLabs division. "A lot of people are already recognizing that we"re going to have to sell a lot more singles at 99 cents in order for us to make money, and for artists to be able to make a living."
Whatever the ongoing tensions, it"s clear that the relationships between record labels and technology companies have improved immeasurably over the past year. Going into the Christmas buying season, numerous services are for the first time offering digital music downloads or online subscription services with the blessing of the big music companies. That--in theory--will help drive purchases of portable music players such as Apple"s iPod or Samsung"s Napster device. Music executives hope all of this will help spark consumers" interest in buying music online and offline, helping to boost revenues in an industry crippled by revenues that have fallen steeply for the last three years.