July 22, 2003 9:51 AM PDT

Buy.com founder launches music service

NEW YORK--Scott Blum, the founder of Internet retailer Buy.com, on Tuesday launched a new digital music download service, hoping to reprise Apple Computer's early success with its iTunes music store.

The new company, BuyMusic, said it offers a catalog of more than 300,000 songs from the five major labels, including Warner Music and Universal Music Group, and from independent recording companies.

Prices for the service start at 79 cents per downloaded song, one of the lowest rates for digital downloaded music. Prices are higher for most songs, however. Entire album downloads begin at $7.95 per album. The site caters only to people with computers that run Microsoft Windows and the Windows Media Player 9 software.

The launch marks the beginning of what will likely be the entry of large e-commerce companies into the digital music world.

Much as iTunes helped drive sales of Apple's music players, BuyMusic hopes to direct users of its service to its online stores.

"We have the BuyMusic store, which will have all kinds of devices for playing music, including digital music players, and CD-Rs as well," said Blum, founder and CEO of both BuyMusic and Buy.com. A representative noted that the two companies are not affiliated in any other way.

The company has earmarked about $40 million for an ad campaign that includes 2,050 television commercial spots over two weeks, 90 percent on national TV, Blum said. Despite the flurry of ads, he expects the service to grow slowly toward its goal of a million downloads a day. He expressed optimism about reaching that milestone by the end of the year but also acknowledged that the service may never reach that level.


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Apple, by contrast, soared in the first weeks after the iTunes launch in April, in what was widely seen as the most attractive pay-per-song music download service yet to hit the Internet. The company sold 5 million songs in iTunes' first eight weeks of operation.

The iTunes service offers the same licensing terms for every song it makes available, while BuyMusic's service has various terms based on its deals with individual recording companies.

"All five majors and the indie deals all have the same basic understanding that we are going to take the music, download it to a hard drive and be able to transfer it to a CD or a digital music player. But they have different rules of usages per label," Blum said. "Some are as flexible as burning 10 discs, and some are three. It really depends on the label and the artists."

BuyMusic's terms of sale also shut out several major digital music players from receiving downloads. The company specifies that devices are allowed to store digital music files and play them back in analog form but must not be able to transfer them on to other electronic devices. For example, consumers with an Archos device, an iPod competitor, would not be able download music, because that system allows them to transfer music to other devices. Apple's iTunes site doesn't face a similar issue, because iPods have a built-in block against that capability.

BuyMusic's infrastructure also relies heavily on Microsoft's .Net technology, the software needed to run Web applications written with Microsoft's development tools.

"When you get to the site, it is going to be painfully obvious that we have a partnership with Microsoft in regards to the way we built the site and run the site," Blum said.

People trying to access the BuyMusic site through rival browsers to Microsoft's Internet Explorer--including Opera, Mozilla, Netscape or Apple's Safari--currently receive an error message.

Blum also called on the leaders of the music industry to work together to develop a standards organization like the ones in the computer industry to bring cohesion to the various music services.

This organization "needs to make a standard way to download among the five major labels," Blum said. "It needs to be consumer-friendly and protect the interests of the artists as well."

 

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