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Technology Stocks : Loudeye Technologies, Inc. (LOUD)
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From: verdad4/15/2005 5:36:27 PM
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2004 Total Revenue $16,821 Cost of Rev $11,778
2003 Total Revenue $11,948 Cost of Rev $6,483

Cost of digital media services revenue. Cost of revenue for digital media services increased to $11.8 million in 2004 from $6.5 million in 2003. We implemented cost reduction initiatives related to our restructuring in March 2003; however, in 2004 we began to expand our digital media services work force in order to meet the demands of anticipated growth and new initiatives particularly in relation to our music store services. In addition, costs associated with the delivery of digital media store services revenue from our acquisition of OD2 in late June 2004 contributed to the increase in digital media store services cost of revenue compared to 2003. Cost of digital media revenue related to Overpeer Inc. and OD2 were approximately $6.6 million in 2004, and included payroll and related expenses of approximately $547,000. Gross profit margins are generally lower for our music store services as compared to our other services, principally as a result of the significant royalties payable to the content providers and publishers on each transaction. As music store services grow, we expect a decline in our overall gross profit margin percentage in the future. However, since this is a digital business with lower incremental fixed costs, as transaction volumes increase we expect that the future growth in transactional volumes will contribute significantly to a reduction in our net loss. We expect cost of revenue related to our digital media services to increase in 2005 as compared to 2004.
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