Internet music firms set to try luck in IPO market
Reuters Story - July 06, 1999 16:39
NEW YORK, July 6 (Reuters) - Internet music firms Liquid Audio and MP3.com Inc. and Internet music retailer musicmaker.com Inc. are rushing to claim their place on the relatively untouched digital music frontier with initial public offerings.
Liquid Audio is scheduled to offer 3.6 million shares in a range of $10 to $12 and musicmaker.com is slated to offer 8.4 million shares in a range of $12 to $14 later in the week. MP3.com is expected to offer 9 million shares in a range of $9 to $11 later in the month.
Although recent IPOs from companies engaged in fledgling markets have performed well on Wall Street, analysts are hesitant about the digital music industry because it is still in an early stage technologically.
Jupiter Communications said in a report that only 3 percent of online consumers will buy downloaded digital music by 2003 and digital music distribution will not emerge as a mainstream consumer technology until the technology can make distribution commonplace.
"Liquid Audio is the only company that has -- today -- a large library of content available for digital download through a digital music network," said Lucas Graves, an analyst at Jupiter. "They want to become a delivery vehicle for major artists."
Liquid Audio is a technology company and has the software that artists and labels can use to encode music, as well as the software for consumers to play it back. That puts it in competition with the likes of IBM Corp. , which is also developing Internet audio programs. Liquid Audio offers rights and royalty management and wants to become a distribution vehicle, competing with firms like EMusic.com, formerly GoodNoise Corp. .
"This is absolutely an embryonic market. They are well-positioned now because they are moving ahead, but it's hard to say what the landscape will look like in six months. It will depend on what the major record labels do going forward."
Liquid Audio has an agreement with EMI Group Plc to encode the British music company's large back catalogue for digital delivery.
MP3.com distributes music, but it is also a portal site.
"Their revenue is based on some pieces of the distribution pie and also advertising revenue," Graves said.
The company's major plus is its alignment with MP3, which developed an early technical standard for audio compression, analysts said.
"MP3 was an early power. The company is lined with the direct standard (for the industry), which it helped create. It offers links to all the different software to play and code MP3 and offers links
to music sites and some songs directly," Graves said.
EMI bought a 50 percent equity stake of musicmaker.com in June. Musicmaker.com had delayed its offering due to talks with EMI. Industry watchers expect a strong debut from the company, particularly because of its pact with EMI.
IPOs in fledgling markets recently have performed well, especially from those companies providing technology related to the Internet. ((--Reshma Kapadia, Wall Street Desk (212) 859-1730)) |
