Catherine Holahan’s article “Music Downloading’s New Deal” discusses the new business model of ad-supported file downloading services. Holahan starts off by giving statistics showing that illegal downloading is still rampant and believes that this is due to a generation of kids who grew up downloading and sharing files on the internet and not seeing it as the equivalent of stealing from a CD from a store. She talks about how many pirate sights are going legit and are trying to form partnerships with records labels. Holahan mentions that many of the legal pay per download services have not been profitable and how subscription services, like Napster, have not been successful either.

A new trend in legal downloading services is a system where users can download free songs but have to sit through advertisements first. The downloading companies must sign deals with record companies to be able to offer their music and then they share the revenue from advertising. Holahan then talks about companies that record labels hire to put bogus files onto illegal downloading services in order to make the process of finding illegal downloads more difficult and making it take more time to weed out the bad files. People within the industry believe that this new business model with the increased inconvenience of finding good quality illegal files will bring a new revenue stream to the music industry. Holahan talks about Qtrax, which closed down its original model to build this new model of ad-supported downloading in fear of alienating the record labels that it would need to work with in the future.

This new alternative business model to the pay per download model and the subscription model is still under development but people within the industry believe that it will have success. After years of fighting downloading services, it appears as if the record companies are finally starting to embrace them and work them into their business models.