6 Retailers to Sell Music on Web

in iPod + iTunes + AppleTV edited January 2014
From the New York (Liberal) Times (had to, just had to):


6 Retailers Plan Venture to Sell Music on the Web


LOS ANGELES, Jan. 26 ? Six of the largest music retailers plan to announce on Monday that they are joining forces to sell music that can be downloaded from the Web.

The retailing group, called Echo, consists of Best Buy, the nation's No. 1 electronics retailer; Tower Records; the Virgin Entertainment Group; Wherehouse Entertainment; Hastings Entertainment; and Trans World Entertainment, which operates the FYE store chain. The six retail companies will each own an equity stake in Echo that together will make them majority owners.

The new effort is motivated in part by the two-year decline in compact disc sales that has forced recording companies to cut costs and lay off employees and has damaged music retailers, too. Wherehouse Entertainment, for one, announced last week that it was filing for bankruptcy protection from its creditors, in part because of lackluster CD sales. And earlier this month, Best Buy announced that it would close 107 stores.

Like the recording companies, music retailers are searching for new sources of revenue. Vinyl albums and cassette tapes have nearly disappeared in recent years, leaving retailers with the CD as their main option for selling music. But a proliferation of free music-swapping services on the Internet has led to a decline in CD sales. According to Nielsen SoundScan, which tracks album sales, 681 million were sold in 2002, down from 785 million in 2000.

"Obviously, there has been a lot of talk in the last three years and there have been a lot of failures," said Dan Hart, the chief executive of Echo, referring to earlier attempts by legitimate Web sites to sell music online. "But we see this as an inflection point. Retailers are saying, `This is the time to do it.' "

Mr. Hart said that Echo hoped to get licenses from the recording companies to distribute their music through the retail chains' own Web sites. In November, the Universal Music Group, which is owned by Vivendi Universal, began to distribute 43,000 of its songs through major retail and music Web sites, like Best Buy and Circuit City, for 99 cents a song or $9.99 an album. That total has since grown to 60,000.

Liquid Audio, a company that has developed technology meant to allow the secure sale of music online, has rights to 350,000 songs for downloading, but also has deep financial problems. The company agreed last week to sell some of its assets to the music distributor Anderson Merchandisers for $3.2 million as part of its liquidation.

Anderson, which is the music distributor for Wal-Mart Stores, also wants to be a distributor of downloadable music in retail outlets. That could eventually put Anderson in competition with Echo, but Mr. Hart said Echo was not opposed to working with Anderson.

In fact, Mr. Hart said he expected the pressures facing all parts of the music businesses ? including distributors, retailers and recording companies ? to motivate them all to work together to find a viable alternative to piracy. "People are saying, `Let's make it work on a real level,' " he said.

Such cooperation in online music ventures would have been unthinkable two years ago as retailers and music companies were at odds about how to best approach online music sales. More than a years ago, music labels embarked on their own online efforts, but so far they have received less than rave reviews.

Now, though, the music companies and the retailers need each other more than ever. Recording companies make the music, but it is retailers who know their customers. "Retail has always been about more than simply selling CD's," said Jerry Comstock, the chief executive of Wherehouse Entertainment. "We are in the customer relationship business."

Under Echo's plan, once the group received the necessary licenses, the partners would market their services together and separately. Efforts might include promotions like "Buy a compact disc, get a free download." The retailers could also enable customers to download music in stores using portable devices, like the Apple iPod. "No one has really marketed these services," Mr. Hart of Echo said.

But some analysts suggest that no matter how much creative and marketing muscle is behind such efforts, they will not catch on unless the music is priced right. The average cost of a compact disc, according to the Recording Industry Association of America, the lobbying group which represents recording companies, is $14.21. Many critics say that is expensive when compared with other media, like DVD's, which offer loads of extra features and programming.

"Any opportunity retailers have to find additional revenue in a time of falling sales is a positive," said Michael Nathanson, an analyst at Sanford C. Bernstein. "Yet we continue to think that pricing has to come down to get pirates off of the free sites and onto legitimate ones."


Mentions Apple iPod specifically. Hm.

[ 01-27-2003: Message edited by: jccbin ]</p>


  • Reply 1 of 5
    matsumatsu Posts: 6,558member
    It's funny how they keep harping about these huge losses, that's just bullshit. Firstly, there aren't any huge losses. Secondly, if the economy is crap for everyone else, why the fvck should it be any better for the music industry, people aren't pirating hardware, cars, clothes... are they? The UK actually saw growth last year, I don't see how that leads to the conclusion that piracy is costing people jobs in the recording business.

    The more I hear this kind of incessant whining, as if to make it true by foprce of repetition, the more I want to start stealing music.

    I buy my CD's, just like I buy my books and movies. Don't fvck around with them, or I will start stealing everything in sight. Make good product, add reasonable price, get sale. Make crap, add idiotic price, give me a hard time, not only do you lose a sale, you gain my animosity and basically beg me to start stealing from you.
  • Reply 2 of 5
    jccbinjccbin Posts: 476member
    Think about this: If the RIAA gets their way and can impose draconian copy-protection on its wares, then the software industry will likely follow.

    This is one reason many software companies are telling the RIAA to shove it -- they already have to live with piracy to some degree - more than the RIAA lives with (in alleged dollars lost).

    Stupid, RIAA. Stupid.
  • Reply 3 of 5
    As long as all of this is done with OPEN STANDARDS, I have no problem with it. The minute it becomes "Windows Media Format" or "Real Player" only I'll have issues.
  • Reply 4 of 5
    taztaz Posts: 74member
    RIAA can pound sand for all I care. I dont steal music so I dont want to be punished for someone else doing it. The economy has been sagginf for a few years now so people just dont see the logic f buying a $16 CD with 10 songs on it, 8 of which are crap 1 of which is OK with the final one being great. The only true reasonwhy they could charge $16/CD was cause at the time people were willing to pay it. Now that the economy is in the dumps, people dont want to waste as much money as before, and buying CD's is a waste of money. Instead of dealing with the economic facts of capitalism, they want to become good little socialists. Screw them and their bloated and useless industry
  • Reply 5 of 5
    The idea of selling download-able music will never catch on. There is way too much hassle involved with it, when someone can just fire up DC, or Limewire and get it for free. I would like to see music turn toward somthing like open-source software goes today. This will level out the playing field for other artists also. Not everyone can get a contract at a recording company.

    Think how the GNU liscence works. You can add to it, modify it, do anything with it, as long as you keep some references and such to the original authors. Now apply it to music. Someone records a song, this part will cost money to the artist. Now they give this song to a company like GNU, who hosts the song on a website and has a place where you could send the author donations and such.

    Any thoughts? <img src="graemlins/hmmm.gif" border="0" alt="[Hmmm]" />
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