Facebook To Add Digital Music?

According to the New York Post, Facebook CEO Mark Zuckerberg is considering getting into the digital-music business.

If the report is true, it would put Facebook on the heels of MySpace's latest strategic effort to differentiate itself among youthful social networkers.

Rhapsody.com, iMeem.com, iLike.com and Lala.com are among the digital-music sites Facebook is reportedly in talks with. Facebook is also said to be in talks with major music labels. It's a move that would put Facebook in competition not only with MySpace, but also Apple's iTunes Store and Amazon.com, among others.

"Facebook is a serious challenger to MySpace and they would certainly want to do anything that record labels would allow them to do with advertising-supported music," said Phil Leigh, senior analyst at Inside Digital Media. "Advertising-supported revenue would be good for Facebook and certainly free access to recorded music would be good for Facebook members. It would be good for the labels, too. If the MySpace deal is working out well, then the labels would probably want to replicate that on Facebook."

Streaming Music?
MySpace Music streamed a billion songs within days after its Sept. 25 launch. By contrast, it took the iTunes Store nearly three years to reach that mark. MySpace admitted it doesn't know if it can keep up those numbers. Its launch was highly publicized.

What's not clear is the pricing model. Would Facebook, if sells music, go with a flat price for a digital download, a subscription model, or an advertising-supported stream, as Leigh suggested? There is no lack of competition on any of those fronts. Nokia and Sony Ericsson are challenging Apple's digital-music empire with a subscription model.

In a recent consumer study by Strategy Analytics, 84 percent of respondents indicated a willingness to pay for a subscription-based music service where they were allowed to keep the music at the end of the term. Nearly 34 percent indicated they would pay $10 per month or more.

While subscription-based services have not performed well to date, Strategy Analytics' consumer research shows a clear latent demand for subscription music that is not being filled by current services.

"The digital-music industry will change significantly over the coming months and years as services such as PlayNow Plus, Comes with Music, and others launch," said David MacQueen, director of the Strategy Analytics Wireless Media Strategies. "We expect rollout to be relatively slow, and it may take some time for the impact to be felt in the U.S. in particular, but existing services cannot afford to rest on their laurels."

More Support for Subscriptions?
Meanwhile, Yahoo and Rhapsody are pushing digital-music buttons -- in the search box. The duo teamed up last month to put play buttons in the search box and make the Web playable. Users who search for an artist with available content on Yahoo can click play right in the Yahoo shortcut and instantly stream full-length songs by that artist through the FoxyTunes Player, powered by Rhapsody.

The partnership lets users to listen to 25 free full-length tracks every 30 days. Once 25 songs have been played, users can subscribe to the Rhapsody Unlimited streaming service or continue to listen to an unlimited number of 30-second samples until the next month.

"The integration of Rhapsody playback into Yahoo Search is a major step toward our goal of delivering 'Music Without Limits' to consumers across the Web," said Neil Smith, vice president of business management for Rhapsody America. "The integration between Rhapsody and Yahoo eliminates additional steps that previously served as a barrier to connecting consumers with artists and their music."