February 8, 2001 10:55 AM PST

Web's oldest music site could become history

The Internet Underground Music Archive, possibly the oldest major music site on the Net, is on life support, looking for last-minute financial rescue.

The IUMA site is shutting its doors to new artists, and a chapter in the Net's history may be closing with it. IUMA got its start in 1993 when a pair of students at University of California at Santa Cruz created a server for distributing their own band's and others' demo tapes and wound up attracting the attention of several major music labels.

In the same year that the Mosaic Web browser was released, the IUMA founders had inadvertently created the first big music distribution site. They went on to create more commercial services such as the Warner Bros. Records Web site, but their first project continued to gain steam.

The news of IUMA's struggles underlines the difficulties even the best-known music sites face today. Paid digital downloads have not taken off as quickly as expected, and the reluctance of major music labels to put unprotected content online has left most sites unable to distribute songs by the popular artists. As a result, cutbacks and layoffs are becoming commonplace.

As a place for independent bands to distribute their music and CDs, IUMA has always existed just outside the public spotlight. Sites offering similar services such as MP3.com ultimately gained more attention, but IUMA has remained well known in both online and offline music circles.

In 1999, the digital music sales company that became EMusic acquired it, but that company has fallen on financial hard times.

"Severe cutbacks in funding from EMusic in early January have made it impossible to maintain the quality and consistency of many IUMA services," founder Jeff Patterson wrote in an e-mail to IUMA members late Wednesday. "Since then, we have made exhaustive attempts to find another partner, but the short time frame has made this extremely difficult, and we have been forced to scale operations to the bare minimum."

According to Patterson, EMusic had agreed to fund IUMA's operation through the end of 2000. That funding has not been renewed.

EMusic itself is struggling against many of the market forces that have pushed several music start-ups out of business in recent months. The company laid off close to a third of its staff in January and said it would focus its financial efforts on the EMusic site and RollingStone.com brand, which it also owns.

Caught in those layoffs were all eight IUMA staffers, which left the site without any official human support. Several of those people have continued to work on the site for the last month, although they are no longer EMusic employees, Patterson said. But that couldn't last forever.

EMusic released quarterly earnings figures Wednesday, posting a loss of 21 cents per share with total revenues of $4.7 million. Wall Street analysts had expected a loss of 20 cents per share.

The company again said that it was focusing on its core businesses such as its new subscription service.

"We believe we are well ahead of others in providing a compelling music subscription service for consumers," said Chief Executive Gene Hoffman. "The growth of our subscription base--even in the face of widespread illegal distribution of digital music--bears this out."

But that has left IUMA's coffers dry. Patterson wrote that the site is still looking for partners, but in the meantime, it has been forced to slash operations.

"We had a number of conversations over the last month, but obviously the initial ones didn't go as we had hoped," Patterson said in an interview. "But since we've gone public with the news, we've gotten a few more bites."

For now, no new bands will be accepted to the site, which hosts thousands of artists' music. The site will stop selling bands' CDs. Artists who are owed money for CD sales will get payments, but the ad revenue that the site traditionally shared with its artists will disappear. A program funneling bands to the Jenny Jones TV show will be ended.

The site hopes to restore many of the services, but that depends on finding financial salvation in a dry market.

"It pains us to have to resort to these drastic measures, but it seems we have no other choice," Patterson wrote in his e-mail. "If by doing this we can live to fight another day, the decision will be worthwhile."

 

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