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PICKING THE HITS INTERNET BECOMING HOT SPOT FOR LISTENER-DESIGNED CDS
(Arizona Republic; 04/20/98)

   Ever wish your favorite band had called you first before it put together the 
lineup of tunes for its new greatest-hits package?

   You like some of the songs, but there always seems to be a load of clinkers 
you don't want to pay for. So you either buy the CD - overpaying for the songs 
you want - or decide it's not worth the money.

   A handful of Internet retailers is trying to eliminate the hit-and-miss 
frustration of music shopping by letting customers pick which tunes they want 
on their CDs.

   Custom CD sites are offering a growing list of titles but, for now, don't 
expect to find the hot hits from radio and MTV.

   "We're getting excellent response. The only obstacle to it really booming is 
the music content," said Julie MacKinnon, chief operating officer of SuperSonic 
Boom, a Vienna, Va., company that sells custom CDs at www.supersonicboom.com.

   The Internet has such established music retailers as www.musicboulevard.com, 
www.towerrecords.com and www.cdnow.com that let customers buy CDs with a credit 
card and a few clicks of the mouse.

   The sites offer thousands of titles in musical styles ranging from Classical 
to heavy metal, and shoppers can listen to audio clips before they buy.

   Custom CD sites take Internet music buying a step further, letting the 
customer decide what goes on the CD. The CDs can cost from less than $10 to 
around $20, depending on how the site charges.

   Sites also let shoppers download tunes to their computer hard drives, where 
they can be stored for playing on a computer audio system, or zapped to a CD 
recorder for the person who wants to make the disc himself.

   "For people who have their own CD-R, this is very attractive thing. If you 
don't have CD-R, it's a very attractive thing to cherry-pick their own CDs," 
said Bill Woods, director of marketing communications for Liquid Audio, a 
Redwood City, Calif., company that develops online music delivery systems.

   Woods' company provides a pipeline for music downloads onto hard discs and 
lets Web sites send audio samples to computers. He sees a music explosion 
coming on the Web, with much of it happening this year.

   The Web can make music available to people who live far from a Virgin 
Megastore or a Tower Records. Streaming audio also lets people listen to radio 
stations all over the country, and there are Web sites like www.sonicnet.com 
that cater to fans with music news, reviews and online chats.

   "Music on demand is here to stay," Woods said. "The genie is out of the 
bottle. Plus, you've got a global marketplace vs. a local marketplace for 
selling."

   But some record industry professionals think letting customers pick and 
choose from an artist's catalog, or collection of recordings, may be the wrong 
way to do business. Mike Farrace, vice president of publications and electronic 
marketing at Sacramento-based Tower Records, said custom CDs might cut into 
sales of older records.

   "This is all about management of intellectual property," he said. "The 
labels own the stuff. They look at any opportunity but I think they're very 
cautious about this. I don't think anybody wants to take a bundle of expression 
like an album and cherry-pick the best parts."

   Farrace looks at the custom CD sellers as niche players and said the music 
industry will never undercut traditional retailers by selling the latest and 
best on the Internet.

   "No record company in their right mind is going to let a new record be sold 
this way," he said.

   Internet researcher Jupiter Communications says online music sales are 
"tiny" now but should reach $1.6 billion by 2002, accounting for 7.5 percent of 
the total market.

   Jupiter believes the Internet will act as a "blender" that shatters and 
mixes the compartmentalized music business, breaking down distinctions among 
performance, broadcast and distribution.

   Makers of custom CDs are pushing to persuade artists and record labels to 
get on board. They've had success attracting smaller labels and artists who 
specialize in styles such as jazz and blues. But the big players aren't yet in 
the game.

   Makers of custom CDs think that will change when labels wake up to the 
potential of turning their dusty archives into a revenue stream.

   Bruce Block, vice president of business development for custom CD seller 
Music Connection Corp. of Herndon, Va., (www.musicmaker.com) said record stores 
can display a limited number of artists while a Net retailer can warehouse 
thousands more, bands such as the Shangra Las that still might sell but aren't 
in stores.

   "Can the labels invest marketing money to push the Shangra Las now? No, not 
when they can push Celine Dion and sell 40 million albums. But they also want 
to sell the Shangra Las," Block said.

   Music Connection tries to be user-friendly for customers not tuned into the 
Web. It sells through advertisements and catalogs and soon will put kiosks for 
ordering custom CDs in airports, college student unions, and book stores.

   "If all you are is a Web company, you're pretty much ignoring the rest of 
the population," Block said. "You're not providing maximum access for 
yourself."

   Where is it all heading? Net music advocates say the Web will give unknown 
bands a way to get noticed and sell their music without hustling a record 
contract.

   They say established bands also can up put teasers for their works-in-
progress, and that mainstream music sellers could augment what's on their 
shelves with disc-making machines in the back room for just-in-time production, 
eliminating the need for big inventory stockpiles.

   They also expect interest to grow as Internet connections get faster, 
speeding download times. They think that the rollout of the high-capacity 
Digital Video Disc also will spark more interest in delivering things like 
music videos over the Net.

   And some observers say there's no reason a shopper shouldn't be able to put 
together something like Bill Gates' Smash Hits just like music fans pick their 
favorite tunes.

   "Anything that's digital," Block said. "You could have a software catalog 
and just choose what you want." Glen Creno can be reached at 444-8972 or at 
glen.creno@pni.com via e-mail.




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