Flat Note.

MUSIC industry; COMPUTER file sharing; MUSIC downloading (Computers); MARKETING strategy; CULTURAL industries; ECONOMICS

The article focuses on the impact of file sharing and music downloading on the U.S. music trade. The music business has suffered years of declining revenues. So last month's Supreme Court decision, which slapped down file-sharing services dedicated to swapping pirated music, was a welcome bit of good news. But the $34 billion global industry has a bigger problem than piracy. Even if music companies can persuade file-sharers to start paying for music again, consumers are unlikely to spend as much as they did in the pre-Napster era. Instead of paying $13 for an entire CD, the digital music marketplace lets buyers grab a song at a time, for 99 cents or less. And given the option--at Apple's iTunes store and its smaller competitors--that's exactly what they're doing: Though the music sites don't publicly break down their sales, those familiar with the results say the majority of digital sales are of single tracks. The big music distributors insist that digital products will increase sales rather than substitute for the CDs. But their actions suggest that they're more worried than they're letting on. All of the big four distributors (Sony/BMG, EMI, Warner, Universal) are cramming physical CDs with extra goodies to entice. And they're doing their best to raise prices on digital music, without saying they're doing it: Buying a song via cell phone, expected to be offered by the end of the year in the U.S., will likely cost $2 or more per tune. There are also plans to start bundling digital tracks with extras like unreleased songs or videos and charging a premium for them.