June 23, 1999

COLUMBUS, OHIO - The Associated Press via NewsEdge Corporation : A popular pastime of home computer users is about to go retail: downloading music.

A Virgin Megastore opening June 30 on the outskirts of Columbus will have kiosks where consumers can compile a custom CD track-by-track from an on-screen list of different artists' work.

It's an idea the recording industry and its superstars have resisted because it could threaten the way they package and profit from their hit songs _ the ones that get people into stores to buy CDs.

Ravi Ahuja, vice president of business development at Virgin Entertainment Group in Los Angeles, said a limited number of songs would be available for compilation. He said consumers also could use the kiosks to recreate CDs that are out-of-print or not popular enough to be kept in stock, at a cost comparable to CDs on the store shelves.

``We won't bill it as, `Get your new releases here.' As long as we market it properly, I don't think people will be disappointed,'' he said.

Ahuja said Virgin will be ``the first music retailer to offer in-store downloading,'' although he said the kiosks have been tried out at a Disneyland gift shop.

Mark Hardie, an analyst with Forrester Research in Cambridge, Mass., said he doubts either the music industry or customers will be happy with the look of store-made CDs. They will be packaged in a standard plastic case, along with cover artwork and liner notes produced on a color printer behind the store counter.

``It's going to look like some cheap copy,'' Hardie predicted.

The technology provider, California-based Digital On-Demand, announced an agreement earlier this month with Sony Music Entertainment to distribute more than 4,000 albums from its catalogs via a secure online channel called the Red Dot Network.

Ahuja and Digital On-Demand spokesman Hal Bringman believe Virgin and RedDotNet can persuade other record labels to follow Sony's lead.

``They're in talks with all of them. Advanced talks, you could say,'' Bringman said from Los Angeles.

Ahuja said Digital On-Demand will provide technicians to maintain the kiosks and printers.

Hardie said a big risk for record stores that want to get into digital downloading is the expense of keeping trained technicians on hand or on call. He said sales clerks might be left fielding complaints or fiddling with computer equipment.

But record stores also are faced with concerns about how to compete with new digital compression formats, such as MP3, that give millions of people the capability of downloading and playing music off the Internet.