April 28, 2002 9:00 PM PDT

Liquid Audio to let subscribers burn music

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Liquid Audio and an EMI division plan to launch a service on Monday that lets subscribers burn tunes to a CD or transfer them to portable devices.

Redwood City, Calif.-based Liquid Audio said its service, dubbed BurnItFirst.com, will carry a collection of songs from EMI CMG, a Christian music company that is a unit of EMI Music. Among the artists will be Steven Curtis Chapman, Newsboys, Avalon and Jump 5. Liquid Audio said subscribers will be able to burn a song to a CD up to three times and export it to five different portable devices.

The BurnItFirst service joins a rash of online music subscription services, including Pressplay and MusicNet, which are all aiming to take the lead in a market that has yet to fully evolve from free file-swapping services.

Phil Benyola, a digital media research associate for investment company Raymond James Financial, said portability is going to be one of the "major issues" for getting people to sign up for these services.

"If they know that they can buy a CD online and burn it themselves instantly instead of having to go to the store to get it, especially if it's at a lower price point, then I think people will be willing to sign up" for the services, Benyola said.

The launch comes as Liquid Audio shareholders are struggling for control of the company. Steel Partners II, a major investor, has criticized Liquid Audio's management and has tried to buy out the company--a deal that was rejected. Among other things, the investors have complained that the company's market value is less than the amount of cash it has on hand.

In the meantime, Liquid Audio has continued to pursue licensing deals with major record labels, recently signing both BMG Entertainment and Universal Music Group.

Liquid Audio is not alone in addressing portability, as some rival services have been testing similar features.

This month, Listen.com said it plans to let some songs on its digital music service, Rhapsody, be copied on to CDs. Pressplay, backed by a consortium of major record labels, lets subscribers burn a limited number of songs to CDs each month. Another service by RioPort allows people to download music on to MP3 players.

Some of the services have yet to move in that direction. For example, MusicNet, another major label-supported service, does not provide burning capabilities or allow downloads to portable devices.

Despite the efforts of subscription services, a lot of music still finds its way on the free file-swapping networks, an ongoing headache for the record industry. In a congressional hearing Tuesday, the Recording Industry Association of America encouraged legislators to earmark additional federal funds to combat the ongoing wave of piracy. The RIAA said the sale of pirated recordings exceeds $4.2 billion worldwide, not including losses because of online piracy.

To protect its music, Liquid Audio said BurnItFirst.com uses its digital rights management format to control copying and transfers to portable devices. For $9.95 a month the service will give consumers 20 digital downloads. Using Liquid Player software, consumers can download full albums or individual tracks, create their own playlists, and burn and transfer songs.

Although the service may only attract a limited audience with Christian music, Matt Smith, vice president of product marketing at Liquid Audio, said the company hopes the amount of available music in that genre will entice consumers, as EMI has "No. 1 market share in that area." In terms of sales, he added, Christian music is "bigger than jazz, classical and new age combined," selling 15 million units last year and growing at 13.5 percent.

BurnItFirst.com "is a completely new model," Smith said. "It's going to (make) obsolete a lot of the other models, and I think it has really addressed the major issues that consumers and the industry (have) been raising about the existing services."

 

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