Online music site cuts fee for songs

By Helen Jung
Associated Press

SEATTLE — The online music price war has begun.

Listen.com, which offers Internet radio broadcasts and other programming for $9.95 a month, is lowering the price for burning digital music onto compact discs to 79 cents per song, the company said today.

The move comes just one month after Apple Computer Inc. launched an online music store, in which Macintosh users can download a song for 99 cents 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 an announcement today that it is also offering the Rhapsody subscription feature under its RealOne brand in a product called RealOne Rhapsody.

The Listen.com acquisition, valued at about $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 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 $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 79 cents, down from 99 cents.

The company decided on the 79-cent price after a six-week experiment, in which Listen.com charged 49 cents per song, chief executive Sean Ryan said.