Startup Spotlight: Wippit tries to beat the MP3 competition

While Napster continues to dominate the headlines in its protracted legal battle with the major labels, Wippit is one company which hopes to develop a rather better relationship with the music industry. Like Napster, it will let users download MP3 files from the Internet, but its business model involves paying royalties to music publishers -- which it will fund by charging an annual membership fee and by carrying advertising. The company was set up in May 2000 by Paul Myers, previously managing director of UK Internet Service Provider X-Stream. French ISP LibertySurf bought X-Stream in March 2000, and Myers is using some of the money he received from this deal to fund Wippit. Wippit will be looking for external funding in March 2001, from what chief executive officer Myers describes as "friends and family". "People have been hassling me for months asking how they can invest in Wippit," he said. However, Myers added that the company would not be going cap in hand to city investors in the near future. "We don't want to give up part of the company just to get some money in the bank, because we've got money in the bank already." Wippit released the alpha version of its software for testing last November, and is aiming to launch the service in May 2001. It has already obtained a licence from the Performing Rights Society, which it needs before it is allowed to distribute music over the Net. However, before it can be confident of not landing in the same legal mess as other peer-to-peer services like Napster and Scour it will need to sign deals with the record labels. Myers says that negotiations with the big music companies are going well, and acknowledges that for Wippit to succeed it will need to be offering the same range of music that Napster made available. "We need a big chunk of content before we go live. Ideally, we should have deals with all the majors and the big independent labels." Assuming Wippit makes those deals, it will pay a royalty to a record label every time a Wippit user downloads a copyright-protected song. To pay those royalties, Wippit will charge an annual fee of around £35 -- for which users of the Wippit client software will be able to download unlimited amounts of music. The client will also carry advertising. Wippit is also planning to offer a premium service, provisionally called "Wippit Gold". Wippit Gold will contain extra features and what Myers called "different levels of content", which could include exclusive content. A price for Wippit Gold hasn't been fixed, but it will probably be at least £70 per annum. The music industry is often accused of having been slow to recognise the potential of the Internet, allowing services such as Napster, Gnutella and Scour to spring up. However, the major labels have recently become involved in a range of online enterprises, and Wippit's biggest challenge -- even if it makes deals with the music publishers, will be surviving in what could be a very crowded market. However, Myers is bullish about the issue of competition. "Yahoo! and Excite seem to co-exist perfectly well. What really matters, as well as the quality of the service, is having a really good distribution model," he said, adding that Wippit was hoping to make an agreement with a retail chain that would boost its exposure to consumers. The service: Wippit
What it does: It's about to launch a legal MP3-download service
Who it's for: Music fans, especially anyone who misses Scour
The verdict: Sounds a great idea, but Wippit will have to make some pretty important deals with the labels Startup Spotlight brings you the best and worst new Web sites every week. Click here to see previous Spotlights. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the techTrader forum Let the editors know what you think in the Mailroom. And read what others have said.