Listen Offers 79-cent Songs

In the first salvo aimed at Apple's iTunes Music Store, listen.com is lowering the price it charges for burnable tracks.

Those who subscribe to the company's Rhapsody music service will now pay 79 cents per track when burning songs to a CD. Previously, CD burns cost 99 cents. Rhapsody offers unlimited access to on-demand streaming music for $9.95 per month.

The price cut follows a six-week trial conducted by Listen and distribution partner Lycos in February and March, in which burnable tracks were sold for 49 cents.

Listen reports that there was a "dramatic increase in sign-up rates" for Rhapsody throughout the course of the promotion. Burning activity increased by more than 300% during the period.

Listen CEO Sean Ryan says the company concluded from its 49-cent burning trial that consumers are looking to buy CDs for less than $10.

The company is also using the feature as a selling point against pay-per-download services like Apple's.

"This is an advantage of subscription services over à la carte," Ryan says.

Subscription services can charge a lower price for CD burns because their revenue streams are diversified.

These models for selling music—which have been in existence for more than a year—have come under fire in the wake of the iTunes launch.

Some music industry executives are questioning whether the slow growth of operations like MusicNet, Pressplay, and Rhapsody indicates that consumers are not willing to pay for access to music on a conditional basis.

In response, operators of such businesses are seeking ways to drum up consumer interest in their monthly-fee-based offerings.

Ryan points out that while subscriptions may not end up attracting the same mass of consumer traffic that pay-per-download services will, they will attract a more active, and perhaps more valuable, music-buying segment.

Listen reports that Rhapsody users are consuming 250 to 300 songs per month through on-demand streaming, in addition to burning select tracks.

He says the Rhapsody model is a much more compelling option for heavy music consumers because such consumption rates in an à la carte environment are cost-prohibitive.

Rhapsody distribution partners like Real Networks are expected to play up that fact in marketing the service.

"All-you-can-eat is a proven model," says Dan Sheeran, VP of marketing at RealNetworks.

RealNetworks—which has an agreement in place to acquire listen.com—added Rhapsody to its RealOne suite of content services May 28. RealNetworks has also stopped offering the MusicNet subscription service.

Listen and other companies are still looking to get into the à la carte download business as well.

Subscription services, along with a host of leading media and technology brands, are planning to slug it out with Apple in the à la carte download business when a Windows-compatible version of iTunes hits the market, possibly later this year.

But just how competitive the pricing environment is remains to be seen.

Ryan says that a 79-cent price point would not necessarily work with an iTunes-style business model.

Ryan says Listen is considering launching a pay-per-download service. But he cautions that in a business model where no subscription is required before buying downloads, the cost per track will likely be more expensive.

Digital-music executives predict that download pricing, instead of being a fixed cost, will ultimately be based on the nature of the track, whether it is a hit, and how long it has been in the market.

And it will all be determined by whether the track is being sold through a subscription service.

Ryan says, "This is not a one-size-fits-all market."