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FEATURE-Liquid Audio waters seeds of Internet music
FEATURE-Liquid Audio waters seeds of Internet music
By Scott Hillis
LOS ANGELES, Aug 18 (Reuters) - Some online music companies
want to use the Internet to tear the recording industry down.
Liquid Audio Inc. is using it to build the industry up.
Convinced the Internet will only strengthen major music
companies, the Redwood City, Calif.-based company is busily
rolling out tools to help them do everything from encrypting
songs for Internet delivery to posting them on the Web and
playing them on portable devices.
"We don't believe the industry is going to change that
much," Liquid's <LQID.O> Chief Executive Officer Gerry Kearby
said in a recent interview. "We've just replaced trucking and
the printing press with Internet functionality."
Such thinking is almost heretical in Internet music
business circles, where companies like MP3.com Inc. <MPPP.O>,
which offers songs by independent artists for free, loudly
prophesy the demise of record label Goliaths.
Artists like Chuck D, lead vocalist for the rap group
Public Enemy, openly deride big music labels while John Perry
Barlow, a Grateful Dead songwriter, says the Internet marks the
dawn of an age where music will be the common property of
mankind.
Kearby doesn't downplay the Internet's ability to rewrite
the rules of commerce, but says the recording establishment is
better equipped to capitalize on the Web than start-ups.
"My motto was 'empower those in power'," Kearby said. "My
strategy was to get into business with them any way you can.
Then when they are ready for digital distribution they look
around and say, 'Who's been my partner all along?'."
Founded in 1996, Liquid is best known for its pirate-proof
alternative to the popular MP3 format that is used to compress
music files, making them easier to send over the Internet while
preserving CD-quality sound. The big labels don't like MP3
because files can be copied perfectly and given away without
paying royalties.
Liquid's music player software is found all over the Net
and on its lime-green Web site (http://www.liquidaudio.com).
Yet the company is banking on its ability to lay the digital
groundwork to help labels and artists sell music online.
"We're building the backend so the transaction can happen,"
Kearby said.
The company has filled out its management ranks, even
installing a "label relations" executive to convince record
companies that Liquid is on their side.
"Liquid has hung tough and come a long way, and they've
signed a number of deals that put them in position to work with
the big music companies, and I think that's very, very
important, because the majors have the bulk of the music that
consumers want," said Mark Hardie, a senior analyst with
Forrester Research who follows online music.
In the studio, musicians can use its "Liquefier" software
to prepare songs for online delivery. In a major boost, EMI
Recorded Music, the music unit of EMI Group Plc. <EMI.L>, has
hired Liquid to encode its catalog of CDs in Liquid's format,
the first step toward selling them on the Internet.
Liquid also provides Internet hosting and advertising. Its
Liquid Music Network bands together about 200 Web sites that
offer Liquid songs. Tower Records and Amazon.com are among the
sites that offer sample Liquid tracks.
The company also is extending its reach to the last mile of
Internet music -- portable players that can store song files on
memory cards or chips and be taken anywhere.
Liquid has teamed with Texas Instruments Inc. <TXN.N> and
SanDisk Corp. <SNDK.O> to offer consumer electronics makers a
ready-made platform to put into such players. Texas Instruments
will make the processor while SanDisk makes the stamp-sized
memory cards that will store music. The first deal with a major
consumer electronics company to use the platform in a portable
device is expected soon.
Liquid also is working with Korean and Japanese companies
to put Internet kiosks in retail stores th...
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