Music download companies face long road ahead

Despite claiming a victory against a major peer-to-peer (P2P) file-sharing operator last year, there is still a long road ahead for Taiwan's online music industry, especially after another online distributor of copyrighted music dropped out of the market this week.

QBand, an online music store run by BenQ Corp (明基), said on its Web site on Sunday that it decided to suspend its service with immediate effect after two years in operation. QBand refused to elaborate on its decision, saying only that it may come back to the market, depending on overall company strategy.

The withdrawal followed that of iBIZ Entertainment Technology Corp (艾比茲娛樂科技), the nation's first online music store, which had obtained authorization from record labels to provide music files for downloading in November 2003, but closed in May last year as a result of huge losses.

KKBOX, an online music store developed by Skysoft Co (願境網訊), and HiMusic, a joint venture of Hinet and Rock Records (滾石), are now the only legal online music providers in the market.

"We reported a deficit last year, but hope to start making money this year," KKBOX president Lin Kuan-chun (林冠群) said.

KKBOX started offering unlimited downloading of copyrighted music files for a monthly charge of NT$149 in October last year. The downloaded files files can only be played on computers, and are not compatible with mobile devices.

The company had planned to offer music files that can be played on digital music devices with a digital copyright-management system, but announced on Tuesday that it was postponing the service because few players are equipped with this function.

KKBOX currently has about 120,000 subscribers, which is not even one-third the subscriber base of kuro.com.tw (飛行網), the nation's largest P2P operator, with more than 400,000 members.

Last September, the Taipei District Court found Kuro guilty of infringing on intellectual property rights, and the company's chairman, chief executive officer and president were sentenced to prison terms ranging from two to three years, along with a fine of NT$3 million (US$993,000) each. One Kuro member was also sentenced to four months in jail with probation of three years.

But the ruling does not seem to have intimidated users into abandoning the NT$99 all-you-can-swap service.

Kuro spokeswoman Maggie Ko (柯美慧) said that while the company has filed an appeal against the ruling, it is also seeking a way to settle with record labels.

"No progress has been made so far," Ko said. "I think we should figure out a way that can benefit online music providers, record companies and consumers."

While Kuro is struggling to maintain its current operations, its US counterparts such as Morpheus are becoming more inclined to play by the copyright holders' rules.

Regardless of the dim outlook for the sector, Yahoo-Kimo Inc (雅虎奇摩), one of the largest Internet portals in Taiwan, said it plans to join the download market in the first quarter of the year, said Ruu Wu (吳苑如), public relations supervisor of Yahoo-Kimo.

Paying for online downloading is a trend, and the company believes it can strike the right note with its marketing strategies, Wu said, adding that details of the new service will not be revealed before the launch.