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The second and fourth largest record companies have just joined forces with Musicane – a three-year old social shopping company – in their quest to wrangle some of the digital music market share from Apple.
Musicane’s business structure operates in a similar fashion as Apple – they pay labels a percentage of their proceeds from the sale of a song, and the labels then compensate their artists. But where Musicane differs from Apple is their ability to sell music via widgets thanks to a unique embedded e-commerce technology. This technology allows users to embed the widget into their desktop, social network profile, or blog, and can then purchase music without ever leaving those spaces. And via Musicane, users can even earn money by recommending their favorite music to others. And Musicane offers labels/artists additional percentages for installing widgets on their own websites/blogs. This is especially beneficial for independent artists as they not only get the additional percentage but also can bypass a third party’s fees to get their music on iTunes.
With the largest record company – Universal Music Group — already onboard, Musicane now has three of the four biggest record companies signed up (and they’re currently in negotations with the third biggest – Warner Music). With the backing of these companies, plus Black Eyed Peas frontman, Will.i.am, as a financial partner and company spokesman, Musicane could be a force to be reckoned with.
But despite all the firepower Musicane has, it’s hard to see them really putting a dent in Apple’s digital dominance. Consumers are already comfortable with Apple and don’t view visiting iTunes as a major hurdle. And Apple is no doubt working on a plan to counteract Musicane right now. Nonetheless, it’s interesting to see a new underdog emerge on the landscape. If you can consider a company who has the backing of three of the largest record companies who control 80% of the worlds major label recordings an underdog. And actually the overall impetus here for the labels seems to get some leverage to charge more than the iTunes-induced 99 cent de facto price per song. Therefore, the success of Musicane likely wouldn’t be a good thing for consumers. So, perhaps it’s best to root against Musicane in this battle. And hope these record companies continue to reap their karma for bludgeoning the world with boy bands, Celine Dion, and American Idol.