Whats holding back online music?
How do you sell snow on the North Pole? That’s the type of problem confronting music companies that want college students and other Internet users to pay to download music instead of swap it for free. If music is available for nothing, why pay? The music industry believes that it loses $3.5 billion a year to pirating through sites like the now-shuttered Napster and its successors, such as Kazaa, Morpheus and Grokster. Music sales have fallen 25 percent since Napster was launched four years ago, and the industry has had three responses: erecting technological barriers to downloading; filing lawsuits against downloaders and their enablers; and creating legal, alternative sites that charge downloading fees that flow to record companies and artists. But according to Wharton marketing professor Peter Fader, who studies online businesses, another promising approach is getting too little attention. “In the long run,” he says, “the celestial jukebox will be the model that everyone prefers.” In
