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LOS ANGELES-The emerging retail market for Internet-delivered music
is being embraced for the first time by a major music label. Capitol
Records is readying plans to sell digitally downloadable singles
directly to consumers via the Internet using technology developed
by Liquid Audio.
Capitol will sell the radio edit of Duran Duran's forthcoming single
"Electric Barbarella" for 99 cents on its World Wide Web site (http://www.
hollywoodandvine.com) beginning Wednesday (10). For $1.99, the
label will also sell an Internet-exclusive remix of the song, which
is from the album "Medazzaland," due Oct. 14. The commercial version
of the single will not be available at traditional retail until
mid-September.
Internet consumers will be able to permanently store their CD-quality
song purchases on their computer hard drives and will be able to
make a permanent copy of the song on a CDRecordable (CD-R) disc.
Liquid Audio's technology includes built-in copyright-protection
technology that prevents the digital duplication of audio files
among consumers. In addition, the technology allows for proper payment
and accounting of mechanical and publishing royalties (Billboard,
March 15).
In addition, consumers who purchase either single will have access
to a private Web site that contains the complete music video for
"Electric Barbarella," which is viewable with RealVideo technology.
Consumers will not be able to permanently store the video on their
computers.
"For Capitol, this is a promotional effort that will ultimately
help us sell the album," says Robin Bechtel, senior director of
new media (U.S.). "It is one more way to introduce music to consumers.
This helps build a buzz on the Internet and drives interest in the
record. We plan to work closely with both traditional and online
retailers for co-promotions for this record."
Capitol will eventually offer singles from other acts on its Web
site, according to Bechtel. Participating artists and tracks were
still being determined at press time, but Bechtel has confirmed
that the second Internet single to be sold will be Spearhead's "Keep
Me Lifted."
Several independent record labels are already experimenting with
the sale of digitally downloadable singles, including the Knitting
Factory, N2K's emod, and IUMA. However, Capitol's decision to embrace
the technology is expected to draw more attention.
Sony Music has announced plans to offer pay-per-play netcasts of
tracks from several of its well-known and developing artists but
has yet to embrace the selling of digitally downloadable music for
permanent storage on a computer hard drive.
"The participation of the major labels will help to draw attention
to this, but the problem is that most consumers still do not have
access to a CDR or other portable recordable device," says Mark
Hardie, a senior analyst for Forrester Research. "It's nice that
consumers will be able to order music online, but ultimately they
will need someplace to store their downloaded purchase."
Another complication is the widespread availability of full-length,
CDquality audio files in the MP3 format. Hundreds and possibly even
thousands of Web and file transfer protocol sites are devoted to
the distribution of unlicensed MP3 files; the Recording Industry
Assn. of America (RIAA) has already filed suit against several sites
that allegedly violated copyright law by offering unlicensed MP3
files for download to Web surfers (Billboard June 21).
Capitol hopes to counter the Internet music piracy underground by
embracing early a legitimate alternative, says Bechtel. The label
is promoting the Internet single through its expansive Duran Duran
fan mail and E-mail list.
"Getting word out to the Duran Duran fans will be the easy part,"
says Bechtel. "Reaching new fans will be the tricky part. We hope
that the new technology will lure some Internet users to rediscover
the band and its music."
Duran Duran's Nick Rhodes says that the Internet is a way
to keep in touch with current fans, as well as reach new ones. "I
have always regarded Duran Duran as a multimedia band," says
Rhodes. "When exciting new technology becomes available,
we try to be at the forefront. It was only a matter of time before
music was sold through the Internet, and Liquid Audio has provided
the sound quality to make it possible . . . Over the coming years,
I'm sure that the Internet will find its way into most people's
living rooms. The technology is developing at such a remarkable
rate [that] I can only imagine the incredible possibilities which
will actually become reality. It is truly an inspiring medium for
artists, and I am certain that our future work will increasingly
involve the Internet."
Capitol believes that selling the Duran Duran single online may
help stimulate sales at retail, says Bechtel. "Most people who find
out about music on the Internet do go down to their local retailer
to make a purchase," says Bechtel. "This will help to generate more
sales at retail."
Liquid Audio VP of marketing (U.S.) Scott Burnett adds, "The Duran
Duran promotion is a great opportunity for the music industry to
see how downloadable singles for sale can help their business. This
is about creating additional revenue-not about taking away established
revenue streams."
Capitol is teaming with several online retailers to cross-promote
the album and the Internet single. Participating retailers, which
include Tower Records' @Tower site, CDnow, and the Ultimate Band
List, will offer advance-purchase opportunities for the full-length
Duran Duran release.
"Tower has always been an innovator, and we are open to looking
at new ways of doing business," says Mike Farrace, Tower Records
VP of publishing and electronic marketing. "Singles have always
driven interest in fulllength albums, but the marketing of singles
is a money-losing proposition. In that perspective, the downloading
of a single is not such a dark thing for retail. I would be more
afraid if it were an entire album. This is an exciting development,
and retail shouldn't stand by and watch this opportunity zip by."
Capitol does not have any current plans to sell complete albums
for digital download via the Internet, according to Bechtel.
"In the past several years, the music-industry profit margin on
CD singles has shrunk dramatically," says Josh Warner of Blink Media,
which is consulting Liquid Audio. "This gives the industry an opportunity
to recoup some of that profit margin while upselling the physical
CDs."
Copyright BPI Communications Inc. Sep 13, 1997
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