Quantcast
"The Echo consortium was established to create a viable business strategy that combines physical and digital music distribution."
——Dan Hart, Echo CEO
RETAILERS TEAM FOR ONLINE MUSIC
Six Companies to Sell Digital Services Through Echo Networks, Which Still Needs Label Licenses Deals
Six retail record store chains—hurting from competition from CD burning, online music and large discount stores—are teaming to offer consumers their own digital music service over the Internet and in their stores.

The six—Best Buy, Tower Records, Trans World Entertainment, Wherehouse Entertainment, Virgin Entertainment Group and Hastings Entertainment—have acquired a controlling stake in Los Angeles-based Echo Networks, which tried to build its own subscription service around Internet radio stations.

The consortium will seek competitive licenses to enable its retail members to effectively compete in the digital music marketplace and to launch a new era of consumer-focused digital music offerings.

One problem. The group of retailers still need to license music from the labels for the venture. Even so, Echo is scheduled to go live before year's end.

Once licenses are obtained, retailers will be able to deliver digital music products and services through individually branded, or Echo co-branded offerings.

The consortium will build upon the in-store marketing capabilities of its retail partners to drive consumer awareness of digital music offerings, and will help drive adoption of new, advanced digital music services as they evolve.

"The Echo consortium was established to create a viable business strategy that combines physical and digital music distribution," said Dan Hart, Echo CEO. "With competitive licenses, music retailers can utilize their long history and expertise in building customer relationships, marketing music and breaking new artists to provide a digital music experience that truly serves the consumer."

Last year, the major record labels formed their own, competing subscription-based online music services, but those legal alternatives to unauthorized file-swapping services such as Napster and KaZaA have yet to catch on with consumers. The record company efforts, Pressplay and MusicNet, have declined to release subscriber numbers, leading skeptical analysts to surmise the numbers have remained low.

The Echo consortium members hope to leverage their existing relationships with customers and the record labels to package off-line and online music.

Individual retailers will decide how to use the technology and music provided by Echo, Hart said. For example, stores could offer digital music tracks on a handout CD, allowing customers to access some of them for free and charging a fee to listen to the rest. Portable players could come pre-loaded with music that customers could listen to for a fee.

Retailers also could allow customers to download tracks at in-store kiosks or over Internet sites, such as Radio Free Virgin.

Hart said he believes the Echo model can work where the recording industry-sponsored services have not.

``I think consumers will pay, but you have to provide the greater level of value,'' he said. ``We're the traditional trading partner of the labels. We understand marketing and how to provide value to consumers.''

Scott Young, VP of Digital Entertainment at Best Buy, said, "Best Buy is focused on creating consumer-based solutions to digital entertainment services. As part of the retail consortium, we will be better able to articulate our message to consumers, to content owners and to those involved in setting standards and legislation regarding this evolving business."

John Marmaduke, Hastings CEO, added, "The message of music retail is simple: we have always excelled at selling music to consumers, and we plan to extend our consumer relationships from the physical world into the digital world."

Kevin Ertell, SVP Online Operations at Tower Records, chimed in, "For over 40 years Tower Records has held a deep commitment to providing consumers with a breadth of entertainment choices. The formation of a digital retail platform reflects Tower's continuing commitment to serving our customers."

John Sullivan, CFO of Trans World, said, "We have closely monitored the evolution of digital music in recent years and we feel that the timing is finally right for building a business around it."

"Virgin has built its brand and its business on providing great value to consumers," said Glen Ward, CEO of Virgin. "In the digital world, we will do the same."

Jerry Comstock, CEO of Wherehouse, adds, "Retail has always been about more than simply selling CDs. We are in the customer relationship business."

Best Buy, Hastings, Tower, Trans World, Virgin, and Wherehouse each own equity in Echo and the retail founders collectively own a controlling majority of Echo.

Strauss Zelnick, former BMG Entertainment CEO and an investor in Echo through ZelnickMedia, will serve on Echo's Board as well. "The bold commitment of the music retailers makes Echo an attractive alternative to label-backed initiatives such as MusicNet and Pressplay," said Zelnick. "With the retailers' music selling experience, distribution capability, and existing trading relationships with content owners, Echo and its retail partners are poised to lead the digital music market to the next level of consumer focus. "

NEAR TRUTHS:
THE CAKE AND
THE CANDLES
Marketshare machers. (10/27a)
KENDRICK INKS WITH UMPG
Lamar enters the House of Jody. (10/27a)
YTD MARKETSHARE: AND THE WINNER IS...
It's a lock. (10/27a)
MAYBE, JUST MAYBE, PT. 8,761: SURGERY IN THE TIME OF COVID
Planning for an Election Day hopped up on painkillers. (10/28a)
ONCE IN A LIFETIME
Vote. Do it now. (10/28a)
RAINMAKERS 2020
Bring your umbrella.
GRAMMY OUTLIERS
Mulling possible surprises.
HALLOWEEN IN QUARANTINE
Why not wear a mask indoors?
ELECTION 2020
What drugs will help us get there?
 Email

 First Name

 Last Name

 Company

 Country
CAPTCHA code
Captcha: (type the characters above)