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Thu, May 29, 2003 - Page 12 News List

Listen.com, Apple go head-to-head over online music

AP , SEATTLE

The online music price war has begun.

Listen.com, which offers Internet radio broadcasts and other programming for US$9.95 a month, is lowering the price for burning digital music onto compact discs to US$0.79 per song.

The move comes just one month after Apple Computer Inc launched an online music store, in which Macintosh users can download a song for US$0.99 with few restrictions -- and no monthly subscription fee.

The announcement also reflects how companies are casting about for effective strategies to lure customers in the nascent business of selling songs online.

"We're starting to see the business model experiments," said Michael McGuire, an analyst with Gartner G2.

Seattle-based RealNetworks, which is acquiring San Francisco-based Listen.com, scheduled a Wednesday announcement that it is also offering the Rhapsody subscription feature under its own RealOne brand in a product called RealOne Rhapsody.

The Listen.com acquisition, valued at about US$36 million in cash and stock, is expected to close later this year.

Companies are trying to allow consumers to copy music from the Internet onto personal computers and CDs legally, cheaply and with few restrictions -- while still satisfying major record labels wary of piracy.

Apple's Music Store approach -- in which customers spend US$0.99 cents per song -- has been popular in its initial month, with more than 2 million downloaded songs in the first 16 days of its launch.

Listen.com offers a different strategy. It already charges customers a US$9.95 monthly fee for access to online radio stations, custom playlists and other programming. It claims "tens of thousands" of subscribers, but is hoping for more by lowering the fee to burn songs to US$0.79, down from US$0.99.

The company decided on the US$0.79 price after a six-week experiment, in which Listen.com charged US$0.49 per song, chief executive Sean Ryan said. The move attracted more subscribers and boosted song downloading, although he declined to reveal figures.

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