Online music, the next net stocks?
from the who's-listening dept
MarketWatch points out some of the more interesting new Internet stocks, the net music stocks. They point out that these stocks get digital music distribution even though the music business does not. Wall Street likes digital distribution's inherent efficiencies. But are they willing to wait for it to pan out. The sofware industry is still making its way to digital distribution after more than 4 years. Given the speed of Internet time, you think they would have been there by now.
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online music sites
Music will progress much more quickly towards downloadable availability than software for one simple reason: more people care about it. Given the amount of software that's bundled on computers today, most consumers probably never buy any additional software besides games, which are too big to download. Contrast that with music - everyone listens to music, there's always tons of new music being released, and most people acquire new music quite frequently.
Now, does that mean online music sites are the next big thing? Maybe - we'll see how MP3.com's IPO does this summer. There are still a lot of unknowns, though. What happens to MP3.com when another bigger badder (or smaller better) format comes along? Will consumers ever embrace micropayments for individual song purchases? If the labels all insist on selling only their own artists on their own sites, how will consumers find music across all of the different sites? Will the RIAA's efforts negatively affect the accessibility of downloadable music? (Doubtful, but...)
The winners in the online music space will have to respond to the needs of their users, both music consumers and artists. That means making music discovery and distribution easy for people looking for downloadable music, and providing distribution AND promotional value to the thousands of artists who have been ignored by the existing music industry.
I don't think this space is mature enough to create the next EBay quite yet, but given the enormity of the online music market, VCs and investors might be smart to cover their bases. You never know what you might be sitting on...
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