Virgin to open music download service

MusicNet bags second big-name customer

By Tony Smith, 8th March 2004

Virgin is to launch a music download service in August. Richard Branson will join Apple, Napster, MusicMatch, BuyMusic et al when he opens Virgin Digital (VD)- the front end for online distribution company MusicNet.

MusicNet was formed in April 2001 by Sony, Bertelsmann Music Group (BMG) and Warner Music Group as a digital music distribution operation supplying online retailers in much the same way their physical distributors supply the labels' High Street retailers.

Since then, MusicNet has signed distribution deals with the remaining 'big five' record companies, EMI and Universal, along with a large roster of independent labels. To this day it sells music through AOL, though an early deal with Real Networks ended last year after Real's acquisition of rival supplier Listen.com and its Rhapsody service. MusicNet also signed Yahoo!, but according to the distributor's web site, AOL remains its only online retail partner.

MusicNet has always offered songs on a subscription basis, though the exact retail approach is left to the retailer. VD president Zack Zalon said that the service will offer both a subscription service and pay-as-you-go downloads. He would be drawn into detailing the company's pricing strategy, saying only that it would be "hyper competitive". However, it's unlikely to be radically below the 99 cents a song price point established by Apple and followed by its rivals.

Instead, VD is likely to compete on the strength of the Virgin brand and the mindshare it has among music buyers, thanks to the Virgin Megastore chain. Virgin's V2 music label and its Virgin Radio broadcasting operation are likely to be used to promote the service, too.

Indeed, its online Radio Free Virgin Internet stations will be explicitly linked to the VD service, through the latter's iTunes-style jukebox software front end. The software, which will be available for download or offered on CD in the various Megastores, will use Microsoft's Windows Media 9 format. ®