5. Looking Forward

The opportunity for independents in digital music is clear.

Indies are thriving in the industry now more than ever, in part due to the impact of digital music, and if independents take advantage of these new opportunities in digital distribution they have everything to gain in the long run. Acting now, independents have the opportunity to control their own future and guide the development of the digital music world.

From the Washington Post, 2/28/05, Downloading: The Next Generation

Contrary to what some online music executives believed at the outset of the pay-to-download business, the depth of the catalog has a direct impact on business. In a 2003 interview, RealNetworks' Richard Wolpert questioned the need for a digital service to have millions of tracks in its catalog, saying, "Eighty to 90 percent of the songs people download [on free services] are the same couple hundred songs."

After nearly two years of watching his own customers, Wolpert jettisoned that supposition. "Catalog does matter," Wolpert said, noting that the company's customers download 90 percent of RealNetworks' million-song catalog every month. That monthly figure remained steady even as the company doubled its catalog.

"In digital there is a 'long tail' of tracks that will sell," Sony's Thomas Hesse said. "There is a great opportunity here to go even deeper in the catalog. People will actually find this stuff." Added EMI's Ted Cohen, "The whole promise of this unlimited digital shelf is playing itself out."

Kevin Arnold is the founder of IODA.