They're killing my baby!
In the wake of the Virgin Megastores MBO, Virgin is also shutting down its digital music store and subscription service. I spent 5 months managing the development and delivery of the site, so I'm sorry to see it go.
Sadly, despite having a stunning user interface, a catalogue of 2.5 million tracks and the Virgin brand behind it, it was never going to work for a number of reasons.
First, the margin available after the record companies and musicnet have taken their share is tiny - pennies per track. So the only way to make money is to sell large volumes of tracks.
This needs investment, which Virgin has been unable to provide. It's hard enough supporting a retail chain in a declining market, let alone sinking money into an online service with less than 1% market share, that will take years to become profitable - if it ever does.
Then there's Apple, which of course, dominates the download market. It's somewhat easier for Apple to operate in this market since its real objective is to sell iPods, not music. The only way to take on iTunes is to compete on one or more of catalogue, convenience or price and it seemed to me that there was a lack of flexibility and interest from the record companies in supporting attempts to do so. Virgin wasn't able to.
Amazon might, though - its new download store is offering higher quality (256Kbps) tracks at 89 cents (10 cents less than iTunes) with the benefit of Amazon's one-click buying. There's also an MP3 Downloader application that automatically adds purchased tracks to iTunes or Windows Media Player libraries. It's been a long time coming, but hopefully Amazon will provide the real competition that the market needs.