Wal-Mart's recent abandonment of WMA format for their download store shows that they do indeed know what they're doing and can respond to the emerging market in a fairly savvy fashion. Some of the majors still aren't on board -- which is pretty odd, given that they're participating in Amazon's MP3 store -- and Wal-Mart remains a hated corporate behemoth, especially for rural-dwelling soy-milk hippies like the Monkeyclaus team, but after nearly ten years of stagnancy and complete, utter, across-the-board stupidity with regard to online music retail, we have to back anything that moves us into the sensible, open market that will benefit honest consumers and independent musicians. (They're claiming they can't sell me mp3s because the Linux machine I'm posting this from is incompatible, which makes no sense, but hey, maybe we have to take baby steps here.)

This also casts doubt on our earlier assumption that Wal-Mart just wouldn't give a damn about music retail and Apple's ever-strengthening hold on it. At the same time, it lends credence to the spreading suspicion that the participation of major labels in Amazon's store is just a ploy to weaken iTunes -- why else would they care which retailers are selling the unprotected copies of their content? In many cases they're excluding iTunes, and now they seem to be doing the same for Wal-Mart. One has to wonder whether they have some back-room deals with Amazon that Wal-Mart was not willing to duplicate.

Either way, the beauty of using a non-contaminated format like MP3 is that it lets everyone in and creates a level playing field, no matter how large or small the outfit may be. Yes, it's good for us, and our enthusiasm here is self-serving. But the thing is, it's also good for you -- unless your last name is Bronfman, that is.

An internal memo at Apple which was just intercepted by Ars Technica congratulates employees on having successfully swiped the #1 spot in music retail from Wal-Mart. This announcement comes barely a month after they announced that they had moved up to #2, suggesting a dramatic growth rate.

This is a coup of sorts in that a digital retailer has never before held the #1 slot, and also because the old guard of the record industry has been fighting with Apple since they started arguing over variable prices in early 2006. Wal-Mart was a mixed blessing of sorts for them -- they were able to get physical copies of popular albums to remote rural areas that didn't have a dedicated local record store, but they have long demanded censored alternate versions of albums with explicit content because of their "family values" and more recently had started to demand lower prices under threat of reduced shelf space.

Nevertheless, quite a few label folks were probably happy to see Wal-Mart stick around, because digital downloads are generally far less profitable than physical sales. One of the more unfortunate aspects of this situation is that we're not likely to see a strong effort from Wal-Mart to regain the title -- even though they're so important to the record industry, music sales are at best a secondary or tertiary source of profits. That would be good for consumers and give the labels still interested in physical retail a fighting chance, but if I were ol' Sammy Walton I doubt I'd so much as blink at this news.

The other surprising news was farther down the list -- Amazon's mp3 store has slipped to #4 despite several months of hype as the industry's Great White Hope in the fight against Apple, with Best Buy claiming the third spot as a result of holiday gift cards being redeemed.

Hopefully this will serve as a wake-up call to anybody who is still unwilling to sell music online. Get on it!

The site allows independent musicians to start accounts and then fund their recordings with presales of an album. By recruiting "believers" -- essentially fans willing to cough up $10 for a "share" of a new album -- they start building a support base. When they reach 5000 fans, the site gives them the $50000 so they can make an album with a serious budget.

When the album is done, everyone who bought shares gets a free copy and gets first dibs on buying additional copies. Sellaband CDs are limited edition, so the investors are getting a collector's item of sorts. As Trent showed us last week, this can fuel sales considerably.

In a way, this is similar to the new Monkeyclaus plan which lets you fund your recording sessions by selling MP3s through our store. One place where Sellaband has us beat, though, is with the support from Amazon -- the online retailer recently pledged to buy 100 shares of any band that can reach 3000 supporters.

Now, there are currently about 6000 artists registered with Sellaband, only 14 of whom have reached the $50,000 mark so far. Still, it's an interesting model, and the fact that it has gained significant traction with a major traditional retailer is encouraging.

Now I'll admit that despite my ongoing frustrations with iTunes and the iTunes Music Store (and irrespective of my lust for their hardware!) I still have a lot of respect for Apple when it comes to the ongoing political issues in the music business. Their hard and fast stance with regard to iTunes pricing combined with their stubborn refusal to support competitors' media formats on the iPod singlehandedly saved listeners from a disastrously incoherent market in which DRM would undoubtedly have been used to manipulate them into repeatedly purchasing the same songs. Steve Jobs even ditched his own DRM as soon as the copyright holders allowed it. Pretty much solely because of Apple, you can now buy music that won't stab you in the back from the likes of Amazon, and it's no longer unreasonable for smaller DRM-free stores like us to reach for big-fish artists and labels as clients.

Summarizing and analyzing the past five years of iTunes politics could take up several posts, though, and it isn't really the point at the moment anyway. There's now an antitrust lawsuit of some sort over Apple's refusal to support the WMA audio format that was favored by the competing online music stores which used DRM. (Until they all tanked, at least -- remember Coca-Cola's music store? Exactly.)

The stance adopted by a lot of the kind-of-major-but-not-as-important-as-Apple players in the digital music game is, of course, that closing out competing media formats is anti-competitive. And they're right, to a certain degree -- after all, the iPods could very easily support more audio formats than they currently do, and Apple's deliberate attempts to prevent that can't possibly be construed as good for the consumer.

If that seems to contradict the preceding adulation, remember that we're talking about audio formats here, not DRM formats. I see no problem with the iPod supporting WMA, and it's only the acceptance of competing DRM schemes that would have landed consumers in trouble. And we won't even get into the irony of trying to break up the Apple monopoly by forcing them to implement the DRM scheme of a convicted monopolist.

So here we have all these hardware and media companies complaining about not being able to sell DRM protected music, but somehow nobody has yet called them out over the fact that they're not doing it themselves.

You'd think that in order to make a compelling case in front of a judge -- or in the public eye, which is ultimately the most important judge of all -- they'd offer up feature-laden hardware with support for every media format on the planet in order to contrast their strategy with Apple's artificial limitations.

Those guys are out there, but the point is not whether Cowon or the late iRiver made for more capable nerd trinketry. The problem is that powerful devices like that are not the expected standard among the iPod competitors. Where's the RealAudio support? Amazon only sells MP3, even though it's been years since Allofmp3 demonstrated that it's entirely feasible to run a multi-format download store with operating costs of merely pennies per track. And, of course, the Microsoft Zune still can't play Ogg Vorbis even though it is an awesome, totally open, and 100% patent-free format.

These are niche media formats with small user bases, for sure, but supporting any of them is trivial. If Apple's opponents really want an open marketplace, they owe it to us to make it truly free -- sell media files in many formats simultaneously, and make sure hardware support for those formats makes it to market more often than not. Then just let me pick what's right for my needs and get the hell out of the way. For the most part, they're all just trying to leverage their chosen form of lock-in, which smacks of "do as I say, not as I do."

In other words -- guys, if you want broad format support, do it yourself before filing your lawsuits!

This is particularly aggravating for an audio encoding geek such as myself, because I'm not happy with the encoding options as implemented by either Apple or Amazon. Sorry, guys, but judging from the services you're providing, I've concluded I can configure an encoder better than anybody on your staff. (I should point out, though, that eMusic comes pretty close to getting it right.) That, too, is probably a post for another day, but at least our customers are getting the benefit of my pent up frustration when they buy the kick-ass audio files we've loaded into the Monkeyclaus download store.

While Monkeyclaus doesn't yet have extensive built-in support for the niche formats, that issue is indeed on the development roadmap. In the meantime, we do sell FLAC, from which any format under the sun can be generated with a mere right-click using tools like Foobar and dBpowerAmp. Neither Rhapsody nor Napster nor any of the other also-ran download stores do that.

Don't get me wrong, though, this frustration is not limited to them. Even though I think we all owe a debt of gratitude to iTunes, when wishing upon stars and birthday candles and such I still inevitably hope for FLAC support in Quicktime. Keep your fingers crossed.

In a press release issued earlier today, Apple announced that the iTunes Music Store is now the second-largest music retailer in the country.

This isn't entirely surprising -- pretty much everyone was shocked back in 2005 in a fairly similar manner when it was revealed that iTunes was beating Tower Records. All reports since then have pointed to the rapid growth in digital download sales, albeit not enough to offset the drop in CD sales and save the floundering record industry.

The only brick-and-mortar retailer able to best iTunes was Wal-Mart, which possesses an almost legendary amount of influence in the record industry due to their position as the sole music outlet in many rural markets -- in fact, they were even able to score exclusive distribution rights for the latest Eagles album. Apple has been getting into this territory as well by asking for exclusive tracks in exchange for lucrative placement within the store's user interface. Interestingly enough, Rolling Stone reported a while back that despite all this, Wally World would still like to see CD prices drop -- much to the chagrin of many record labels, I'm sure.

Even if that comes to pass, one has to wonder how long it'll take for Apple to pull into the #1 slot -- remember, the store launched only five years ago, so if you take a step back and view things in macro mode, we're actually witnessing a rather fantastic coup d'etat here. The wild cards here include the ongoing abandoning of DRM -- which has in turn allowed the first strong iTunes competitor ever in the form of the Amazon MP3 Store -- and, to a lesser, extent, the fact that Wal-Mart also runs their own music download store which is also benefiting from the lack of DRM. Still, it's not unreasonable to expect the crown to be handed over to iTunes within a few years, especially when you consider that Wal-Mart has many other more lucrative revenue streams and probably won't really give a damn about keeping up.

By some sheer stroke of luck and/or force of fate, I happened to be present at the closing of the last Tower Records location in the country when the company shut down for good in late 2006 -- the store was gutted to the bone, with everything from signs to chairs to CD racks offered up for sale to the public (I picked up a huge red plastic shopping basket for about two or three bucks myself) and they started playing Don McLean's "American Pie" as they flipped the light switch for the last time ever -- "the day the music died," indeed.

The scary thing to consider in all this is that even though iTunes made headlines when it leapfrogged its way past a store which had been a pillar of music retail for decades, Tower was still within the top 5 or so retailers nationally at the time. Obviously Monkeyclaus wholeheartedly embraces digital music sales in a way that Tower didn't, but it's sobering to realize that being one of the biggest retailers in the country -- even if that was a step or two below Apple -- wasn't enough to save them. This business is trickier than ever, for sure.