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Wippit in harmony with UK majors

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UK online music service Wippit has added a second music major to its roster, hot on the heels of becoming the first P2P system to attract the attention of the industry's big boys.

The company this week signed its second major contract having already shaken hands with EMI. It says it has two more deals at contract stage.

Wippit has survived the last few years on indie music only, signing 200 of the less well-known independent record labels and only now having the credibility to open negotiations with the big guys.

Blowing bubbles

Wippit CEO Paul Myers burst a few of the bubbles about online music services and cast some doubt over just why it is that Apple iTunes and Roxio are having trouble tying up European rights with their record labels.

"If I can do it, and get world-wide online rights, then I don't see what's holding them up. It's certainly not the red tape and bureaucracy of individual European countries, like they say it is."

The real problem is likely to be a combination of greed and a worry that the European market will not be easily shaken from its piratical ways. Most online music services in Europe that offer a "price per track" system like Apple, are being encouraged to set this at 99 pence rather than 99 cents.

Given that the currencies are trading at over $1.80 per UK pound, that means a hefty 80 per cent hike over the US prices. Any lower and retailers, who have been charging that amount for years, would find that they were priced out of business.

This year's model

Myers has a different model and charges £30 ($54) a year (not per month) to each of his 180,000 registered users. He splits revenue - including any advertising revenue he gets - 50/50 with all of his partner labels, and they each get an pro-rata amount related to the number of downloads that happen on the network.

His system is to gradually place content on the site; not deliver it all in one go. He treats it like any other publishing process. "BskyB doesn't put all of its good films on all in one go," he said, "and it's a bit like that. You have to keep new stuff coming in all the time."

Because so many of his record labels are independents, many of them cannot get air play on the radio, and so they opt for unprotected MP3 files to be placed on his site and give permission for file-sharing rights between all of the Wippit customers. Others need the security of Windows Media DRM wrapped around them and file sharing is not allowed.

Kajagoogoo

In about a week he will flood Wippit with selected EMI tracks. "We have been given access to about 97 per cent of the EMI catalogue but we will be selecting the cream. These sites that talk about having 500,000 tracks have too many Kajagoogoo B sides for my liking and that makes it confusing to use as a service and denigrates the user experience."

Myers confesses that his formula works out quite well for his record labels. "We have operated on a quarterly basis at prices per downloaded track to the label of between 44 pence (79 cents) and £1.12 ($2) using that method. That's more than they would get from a retailer, and they don't have the price of making a CD."

Myers is a little shy when you ask about rumours that he himself is going to add a "per track" option, but under his contracts he can set it as low as 29 pence (52 cents) a track.

His final word is reserved for OD2 which services nearly all the European online music services through its own delivery mechanism. "Business there is slow. There are albums that you can buy for £8.99 ($16) on Amazon that will arrive next day, that if you buy from OD2, by the time you have bought each track and paid for the CD and burnt it yourself, will cost you £24 ($43)," he concludes. If that's true, then it's hardly a way to convince millions of people to stop illegal file sharing.

© Copyright 2004 Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of events that have happened each week in the world of digital media. Faultline is where media meets technology. Subscription details here.

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