Loudeye, Microsoft team on music store
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Seattle-based Loudeye and the software giant said Monday that they will work together to handle the infrastructure and distribution for online music services branded by other companies that are looking to sell songs online or to enter the digital media business in some other way.
Loudeye's digital music services, which include its Digital Music Store and iRadio Service that contains 100 preprogrammed music channels, are based on Microsoft's Windows Media 9 Series technology.Early customers of the service include AT&T Wireless and Gibson Audio, a division of Gibson Guitars.
"The problem for companies that want to launch adigital media service with their own brand is thatit's very expensive," said Loudeye Chief ExecutiveOfficer Jeff Cavins. "We'll charge them a fraction ofthe cost of what it would take to build itthemselves."
Loudeye's plan highlights the growing presence oflegal downloadable music, just eight months afterApple launched its iTunes song store.
Many, if not most, of the large online shopping orentertainment destinations have announced plans tooffer their own stores. In addition to Apple'slaunch of a Windows version of its store, Buy.comfounder Scott Blum has created BuyMusic.com,Roxio has launched Napster 2.0, Musicmatch hasturned its jukebox and radio service into a songstore, and subscription service MusicNow has added a store.
Microsoft also has said it will enter the market next year.Wal-Mart Stores is expected to launch a store later thismonth or early next year. Computer makers Dell andHewlett-Packard are co-branding other companies' services.
However, the profit potential for these services remains dim. Apple has stated that it does not make money from iTunes, relying instead on the service's ability to drive demand for its iPoddigital music player. Other industry executives have said thatprofits are possible, even if they are razor-thin.
Loudeye's Cavins said there is room for an intermediary in thebusiness despite the tiny profit margins. His companyis looking for customers who are interested in digital music distribution as a promotional tool for another product or service, rather than as astandalone business, he said.
"There are a lot of companies that are not your usualsuspects that will pay to have services that will drivecross promotion," Cavins said. "What it comes down tois that there are companies that are learning thatusing digital media is a good way to cement a brand."
Neither of the company's initial customers are doingtraditional iTunes-like stores. AT&T Wireless willhave a service that will sell ring tones and musictracks that can be downloaded to a PC.Gibson Audio is creating a line of digital musicjukeboxes for the high-end home consumer market.
Loudeye has previously focused on encoding and storingdigital music for other services, including iTunes,and providing samples of music for CD sales outlets such as Amazon.com.
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