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Freeserve takes ten per cent of UK MP3.com wannabe

Yet-to-launch Floot.com swaps equity for access to ISP's subscriber base

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Freeserve will take a ten per cent stake -- value in cash terms unstated -- in an online music supplier, Floot.com, that hasn't even launched yet. In return, the free ISP will market Floot's catalogue as part of its ADSL service, which it's trialling at the moment, but which is due to go fully live in the spring. Freeserve's Simon Cook described Floot as something that "promises (to be) most interesting" -- hardly a ringing endorsement, but then Freeserve already has a music partner for its ADSL service, Peoplesound.com. So what's special about Floot? To be honest, not a lot -- we're talking your average MP3.com wannabe, albeit oriented toward a UK audience rather than an American one. Floot's USP is size and breadth of catalogue -- in other words, tracks from all musical genres and lots of 'em. What's not yet clear is where it's going to get them. The plan is that artists will partner with Floot to sell tracks online, attracted by Floot's ability to "pay a greater percentage of royalties". This, of course, means that Floot will pay more cheques than record companies do, not that artists will get a greater cut from each track sold, but we assume Floot really does mean the latter. Bath-based Floot has already begun assembling its artist roster by acquiring Rebelsound.com from down the road in Melksham, Wiltshire. Alas Rebelsound's list of "close to one thousand tracks from both unsigned and signed musicians" appears to comprise the usual bunch of no-name hopefuls and garage bands. Rebel Yell Attracting better known names -- ie. ones that will actually make money -- will depend on building up an audience. Hence the desire to work with a company like Freeserve, which has a user base of well over a million subscribers (though most are not using ADSL). But without a way into the CD retail world, which absolutely dominates music sales and is likely to do so for the foreseeable future, the numbers simply aren't going to stack up for Floot -- and indeed many of the other fledgling Internet music businesses. A key strand in Floot's approach to winning business is to focus on "one-on-one marketing", which sounds like a more powerful alternative to mass-marketing, but really means that Floot will target existing buyers because that's all it can afford to do. Since most music buyers decide what to buy on the basis of hearing tracks on the radio or seeing in-store displays, it will be interesting to see just how effective this is. What's in it for Freeserve? The ISP gets ten per cent of a company that could feasibly undertake a typically inflated IPO (and Freeserve knows all about those...) and which could provide a useful moneyspinner if it takes off in the way Floot's bosses hope, all in exchange for a small slot on its numerous homepages. Freeserve can easily afford to take the risk. Floot's Web site states the service will go live in the summer rather than the spring, though this may simply mean Freeserve's ADSL users will get access ahead of everyone else. ®

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