This from Barron's which I would assess as more non-commital garbage from the financial press wasting the world's trees. God only knows the final form of internet music downloads. But it is here to stay.
<<July 26, 1999
Don't Count on Music Fans Crying, "I Want My MP3"
By Mark Veverka
As a teenager growing up in suburban Chicago in the late 'Seventies, I remember one typically wintry spring when Bob Pittman was splattered all over the Windy City's airwaves.
Every time you turned on the television, it seemed the ubiquitous rising radio programmer was touting a revolutionary way to listen to rock music on FM radio: commercial-free.
Long before the words "fat-free" and "caffeine-free" polluted our lexicon, Pittman -- then a manager for an NBC-owned station-master -- minded the launch of a new album rock format by playing song after song without the rude intrusion of radio spot ads.
His strategy was to hook new listeners, rapidly capture a critical mass audience, and build a brand. Of course, after several weeks, the station -- WKQX -- needed to pay some bills and eventually succumbed to the economic model still used today. It began running ads.
Of course, some listeners bailed out and went back to other stations, but many stayed. And, by and large, the gambit worked. It was just one of the many marketing feats that the current chief operating officer of America Online would pull off in his diversified career, which includes stints as CEO of MTV Networks and Century 21 Real Estate.
So who better to ask, than Pittman, about the prospects for the next big wave in the music industry: the practice of downloading digital music over the Internet?
"I think MP3 is great. I think it's terrific. It offers a lot of things that the [compact disc] does not," Pittman said at an Internet conference in Dana Point, California, last week.
MP3 is a digital format that allows music to be distributed over the Internet. It also happens to be the better half of the name of a San Diego company that launched yet another torrid Internet IPO last week, MP3.com.
Money-losing MP3.com, which has not existed for much more than 16 months, saw its shares, which were priced at a whopping $28, get out of the gate at $92 and soar as high as $105 on their first day of trading Wednesday. The shares finally settled at around $63 by day's end and closed Friday at about $64.
Once again, nearly $4 billion in market value was forged in a single day by a Web darling -- an upstart that lost $1.5 million during the first quarter on revenues of $665,785.
Of course, we've seen this kind of nuttiness before, but MP3.com may have even less that meets the eye than some of its other 'Net brethren.
While many 'Net aficionados hail the arrival of online music stores, very few are convinced that MP3.com is going to be the one that will lead artists to a new music world order.
Can you say flip?
"It's just a brand name. The IPO's success was not a surprise, but check the stock price after a month or so," says one San Francisco technology fund manager, who doesn't expect institutions to hold MP3.com's shares very long.
One obvious problem is that MP3.com doesn't have many, if any, major recording artists under contract. Who is going to pay to wade through the company's stable of 14,000 little-known artists?
The company is banking on the strong possibility that established recording artists, like the Rolling Stones, are going to ditch their record companies and sell their music direct to the public. Thus, the industry would undergo a sea change. The middlemen -- the record companies in this case -- would become an endangered species and an entirely more egalitarian market for recording artists would emerge.
And while few doubt that the future for the record companies as we know them looks bleak, equally few are persuaded that MP3.com is going to profitably fill the void.
"It's not a business and never will be," says Mark Cuban, former chairman of Broadcast.com, who sold his audio-streaming 'Net startup to Yahoo for $4.9 billion.
"I think it's a real challenge. It just doesn't play to people's time," says Cuban, referring to the fact that consumers have to listen to dozens of songs over their computers before deciding to buy.
Plus, there's the problem of whether MP3.com has made a big enough investment in its back-end computer infrastucture to handle customer demand. After watching online auctioneer eBay suffer from a barrage of system crashes, not unlike a series of outages that plagued AOL early on, Cuban thinks MP3.com could face similar breakdowns.
"There's a technical issue that people aren't addressing here," Cuban noted in an interview.
Meanwhile, Morgan Stanley Dean Witter analyst Mary Meeker likened MP3.com's instant incarnation to an Amish "barn raising."
To which venture capitalist Mark Stevens, managing partner of Sequoia Capital and a 14.5% stakeholder in MP3.com replied: "On the Internet, speed sometimes exceeds everything else."
And in this case, perhaps, expedience took precedent over building a business that can stand behind what might have been the best brand name in the business.
"At MP3.com, we saw a window," Stevens explains. "It was a 90-day march" to take the company public, he adds.>>
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