January 27, 2003 5:41 AM PST

Retailers in concert on digital music

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January 15, 2003
A group of music retailers has formed a consortium to sell digital music.

Best Buy, Hastings Entertainment, Tower Records, Trans World Entertainment, Virgin Entertainment and Wherehouse Music will work together to "effectively compete in the digital music marketplace," the companies said Monday.

The retailers did not give specific details of their plans, but said they would try and get licenses to deliver digital music products and services in their stores. The retailers will sell digital music under their own brands or co-branded with the consortium.

The group created the consortium through an investment in Echo Networks, which formerly operated a streaming music community. Echo signed a deal with Warner Music Group in 2001 to launch a music subscription service.

"Retail has always been about more than simply selling CDs," Wherehouse CEO Jerry Comstock said in a press release. "We are in the customer-relationship business."

According to the Echo Web site, the companies will be able to offer on-demand streaming and downloading with music recommendation services, using a "standard and open platform."

The retailers' move is the latest step in a complicated dance with the music industry. While consumers are growing more interested in digital downloads, concerns over copyright protection and money have so far halted widespread adoption of the technology by the industry.

"The message of music retail is simple: We have always excelled at selling music to consumers, and we plan to extend our consumer relationships from the physical world into the digital world," John Marmaduke, CEO of Hastings, said in a release.

Best Buy, Hastings, Trans World, Virgin and Wherehouse will each own an equity stake in Echo. Arnie Bernstein, former president of the National Association of Recording Merchandisers, will serve on Echo's board, as will Strauss Zelnick, former CEO of BMG Entertainment.

 

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