Naxos Goes Download

Naxos, the world's leading distributor of classical music, has just signed a worldwide digital distribution deal with the Independent Online Distribution Alliance (IODA), which will use its Digital Distribution Dashboard (D3) technology platform to distribute and manage music files from the Naxos family of distributed music labels. The deal entails distributing titles to many of Naxos' 22 Digital Service Providers, including Sony Connect, Rhapsody, iTunes, Napster, and Microsoft (which charges consumers the lowest download price of all: $4.99 for an entire Naxos CD).

Kevin Arnold, IODA's CEO, told Stereophile that he founded the alliance in spring 2003 both to help indie labels manage and organize their information, and to get their music licensed and into stores. Currently representing over 700 labels, IODA expects its 125,000 online files to increase to over 200,000 with the addition of Naxos' catalog.

Prior to signing with Naxos, less than 10% of IODA's music was classical. While their largest classical label, until now was Hänssler, they have recently signed with Harmonia Mundi, Arabesque, New Albion, Other Minds, the London Symphony Orchestra, Essay (which had one of the top-selling classical titles of 2004), and a major US symphony orchestra whose name has yet to be announced.

Naxos' catalog of its own recordings includes some 75,000 tracks, many derived from longer works comprised of three, four, or more movements. The company's goal is to have every track available for distribution and downloading within a month or two. This includes distribution to the international market, niche stores, and a wide array of delivery technologies including music kiosks, Internet jukeboxes such as ECAST, and mobile ring-tone companies. (Imagine your cell phone intoning Beethoven's funeral march from the "Eroica.")

According to Naxos president Jim Sturgeon, "There isn't a single DSP out there that has ingested all 75,000 tracks. When Emusic launches in mid-September, they'll be the first to offer every Naxos track. When we finally see everything up and ready for purchase, including music from our distributed labels such as CPO, we will begin to know the true potential of downloading classical music."

Both Arnold and Sturgeon believe that the wide availability of digital technology will open classical music to a new audience. While consumers may initially intend to download a single track they hear on TV, they often preview an entire work and take the plunge. The hunt for wedding samplers also frequently leads classical newbies to Naxos' huge catalogue.

"Classical, jazz, and blues are the great unknowns for young people," says Arnold. "With digital downloading or a subscription service, you can cover a lot of new ground. There's no barrier for discovery."

Naxos has an agreement with its DSPs that if a track is over seven minutes in length, the consumer must purchase the entire CD. Thus, the search for a single snippet often results in far greater exposure to classical music.

"We don't fit the standard pop format of three or four minute bites," says Sturgeon. "If you want to listen to classical music, you just don't come in for the appetizer; you're there for the entire experience."

Sturgeon observes that whenever classical music is offered online, through either a DSP or a retailer, the market share doubles. "When the classical consumer finds exactly what they want, they buy. And 10–15% buy because the music is immediately available.

"The market share of classical music in the US has been pushed back because American consumers are disappointed when they can't find the music they want in retail outlets. Soon, all the classical music we offer will be available digitally 24 hours a day. When our music is offered to the right consumer in the right place, there's no reluctance to purchase."

Of the 10 million CDs sold worldwide each week, roughly 3% are classical. That may amount to a small percentage of gross sales, but it's nothing to scoff at. Thanks to the increased popularity of downloading, Sturgeon expects that in five years, 30–35% of Naxos' revenue will derive from non-physical sales. His projection parallels Arnold's assertion that while legal digital downloading currently comprises only 2–3% of music purchases, it is expected to rise to 5% by the end of the year, and to 25% in five years.

Naxos' Sturgeon acknowledges that, for many audiophiles, a major barrier to downloading is the compromised sound quality of MP3s. While there are already one or two high-quality classical services that use superior WAV, FLAC, or WMA lossless compression formats, Naxos expects to soon offer Windows Media lossless downloads through the Naxos website or some of its DSP partners. Sturgeon claims this will deliver "CD quality or better" digital downloads to audiophiles.

Sturgeon notes that Nicholas Bedworth of Digital Direct Media Services has been working with Microsoft to develop a 5.1 broadband download technology that does not sacrifice download speed. While only a small fraction of Naxos' releases are currently available in 5.1 SACD and/or DVD-A high-resolution formats, all of the label's new major orchestral undertakings are now captured in 5.1 sound. When high-resolution 5.1 downloading becomes a reality, Sturgeon asserts, Naxos will be fully prepared to satisfy audiophile demands.