AOL Enters Subscriber Music Arena

America Online (AOL), the online division of AOL Time Warner, will soon discover whether its 35 million subscribers will pay additional monthly fees to download music to their PCs, a key test of digital music subscriptions. The new service is called MusicNet on AOL, and it will cost $4 to $18 a month, depending on whether subscribers choose limited access to AOL's music library or unlimited access with CD-burning functionality. Downloaded songs are available for use only as long as users keep their subscriptions active.

For $4 a month, MusicNet on AOL subscribers get limited access to over 260,000 songs from a wide selection of AOL Time Warner's artists. Users opting for the $9 a month subscription have unlimited access to the library. And for $18 a month, users gain the ability to burn 10 songs to a CD each month. AOL also says that it will phase in an option where subscribers can pay $1 to download individual songs as well.

If AOL can jumpstart digital music sales, it will be a first. Though other online music services, such as Rhapsody and Pressplay boast similarly sized libraries as MusicNet, neither has been an overwhelming success so far. Jupiter Research says that fewer than 300,000 regularly pay for monthly digital music subscriptions, meaning that the market is currently worth less than $25 million, which is essentially a rounding error in AOL's recent financial losses. But AOL does have a few things going for it: The service currently boasts over 50 percent of the songs in the Billboard top 200, and the company says it will offer 100 percent of the top songs, digitally, by the end of the year. Also, AOL has been sensitive to the needs of subscribers: After testing a version of MusicNet last year that garnered poor reviews, the company simply scuttled the project and reworked it according to subscriber wishes.

Still, digital music downloads are unlikely to trigger massive sales until digital rights management (DRM) issues can be resolved. Currently, most legitimately downloaded music contains locks that prevent the songs from being burned to CD, leaving consumers that want to make mix CDs in the lurch.

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