It looks as if the online music industry, grappling with concerns over digital formats, piracy and technical woes, will have to wait until next year for a merry Christmas.
While other Internet businesses, from selling books to booking tickets, are ringing up billions of dollars in sales, Web music is still largely confined to the tech-savvy crowd despite early predictions of a blockbuster holiday season.
Companies such as MP3.com Inc. and EMusic.com Inc., which let users download music to their computers, have generated a lot of buzz and attracted the attention of Wall Street.
But complicated software, pricey portable music devices and a battle over how easy it should be to copy songs means it will be some time before the personal computer replaces the stereo system.
"It is probably one of the biggest killer apps on the Web in the next 12 months, but it's also one of the most chaotic and least defined," said Bob Ohlwiler, vice president of marketing for software company MusicMatch Inc.
MusicMatch and others, most notably RealNetworks Inc., have brought a semblance of order to the industry with jukebox software that records compact discs, downloads songs from the World Wide Web and organizes music files on the PC.
But the Holy Grail of actually selling music online remains a distant goal.
For one thing, record labels, haunted by visions of hackers e-mailing Top 40 hits for free, have been reluctant to release songs in formats such as MP3, which is favored by many users but has no copyright protection.
MP3 and other formats work by compressing a digital music file, such as one taken off a CD, to one-tenth or less of its original size, making it easier to send over the Web.
An initiative to decide how to make the music pirate-proof is bogged down by bickering between the labels, which want to make it difficult to record new CDs, and hardware and software companies that say listeners will demand the power to record and play all their music.
Another problem is unshackling listeners from the tinny confines of their PC speakers.
Sales of portable gadgets that can store music on tiny memory cards or chips have sputtered, reaching maybe 750,000 units, well short of industry estimates of 1 million by the end of the year.
Devices that will let people play music files in their car or home stereo are only just coming to market, at prices only technology fanatics won't protest.
"It hasn't taken off as much as analysts expected," said Andy Rathbone, author of "MP3 for Dummies," a how-to guide for digital music that recently hit the shelves.
"There is reluctance among record companies to use the MP3 format and make a lot of music available in that format. The industry is in a state of stagnation about what to do about this MP3 monster," Rathbone said.
Such concerns have made investors uncertain.
Shares in MP3.com closed at $28.25 today, down 25 cents--near a 52-week low of $23.31 1/4 and far below its high of $105. EMusic traded at $10, down from a 52-week peak of $35, while Liquid Audio Inc., which makes software to encode and play songs, was at $36.87 1/2, off its 52-week high of $49.25.
Others insist that the industry is booming and that the incredible velocity of Internet business has warped people's expectations.
"If you look at the rate of adoption . . . it's happened much, much faster than CDs happened or cassettes happened," said Ken Wirt, chief executive of Riffage.com Inc., which offers music by unsigned bands.
Hardware makers appear ready to bring better and cheaper portable devices to market.
"There's some really compelling devices out already, and even better ones coming out in January and February of next year," said EMusic chief executive Gene Hoffman Jr.
There's even good news from the labels. EMI Recorded Music, a division of EMI Group PLC, says it could start selling singles on the Web next year.
"Technology is not a threat. It gives birth to new and expanded markets," Jay Samit, vice president of new media for the label, told an industry conference recently.
Such developments have led to promises that 2000 will be the industry's breakout year and that a winter wonderland will await those who are patient.
"There is going to be a really, really serious Christmas next year that we don't really have any inkling of right now," EMusic's Hoffman said.