New Internet Record Company to Pioneer Market For Online Music Delivery
PR Newswire - June 30, 1998 07:16
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GoodNoise Corporation Founded as First Record Company Focused on the Internet;
New Company Features Unique Management Team with Extensive Music and Technology Industry Experience
PALO ALTO, Calif., June 30 /PRNewswire/ -- In response to the exploding demand for music on the Internet, a new company was launched today that expects to pioneer the market for online music delivery, or "downloadable" recordings (music delivered to consumers through a file transfer over the Internet). The new company, which is called GoodNoise Corporation (OTC Bulletin Board: GDNO), is the first record company to focus on the Internet as the primary platform for the sale and electronic delivery of music. GoodNoise was founded earlier this year by a unique group of entrepreneurs from the technology and music industries and is backed by an impressive advisory board that includes well-known artists, and technology and music industry leaders.
As part of today's launch, GoodNoise also announced a strategic partnership with peermusic (http://www.peermusic.com), the preeminent privately-held music publishing company in the world. In connection with the partnership, peermusic has taken a minority position in GoodNoise and Ralph Peer, II, chairman and CEO of peermusic, has joined the GoodNoise board of directors.
GoodNoise Corporation, which is headquartered in Palo Alto, California, is a publicly held company. The company's stock is traded on the NASD OTC Bulletin Board under the symbol GDNO. GoodNoise was founded by Robert H. Kohn, 41, a high-tech industry executive and a leading authority on music licensing, and Gene Hoffman, 22, a high-tech entrepreneur who is a veteran of several technology startups. Kohn is chairman of GoodNoise and Hoffman serves as its president and CEO.
According to Kohn, the music industry is witnessing the dawn of a new era -- the era of downloadable recordings. "The music industry is facing a transition that is fundamentally affecting how music is delivered to consumers and how recording artists relate to their record companies," he says. "The shift from vinyl records and cassette tapes to CDs was significant, but it's nothing compared to the changes now being driven by the Internet. In five years, we believe that well over 50 percent of music will be purchased and delivered electronically."
"Our focus at GoodNoise is to embrace these changes and build a profitable growing business around this emerging market," Kohn says. "To succeed, a company must have an understanding of the legal relationships necessary in acquiring music for and licensing music on the Internet, a technology foundation to create a positive consumer experience, and the right connections in both the high-tech and music industries in order to build good strategic partnerships. GoodNoise is one of the few companies that combines these competencies."
According to Jupiter Communications, a leading industry analyst firm, online music revenues -- which include advertising , merchandising and ticket sales -- are expected to grow to $2.8 billion by the year 2002, up from $71 million in 1997. The market for online delivery of music, while still in its infancy, is one of the fastest growing market segments and is projected to be a $1.6 billion market by the year 2002.
Thousands of consumers, primarily in the college-age market, have embraced technology that allows them to download songs from the Internet and play these recordings at CD quality on their personal computers. GoodNoise believes that as Internet bandwidth increases and the market for recordable CDs and other devices that allow consumers to play the music on their home audio equipment expands, the online delivery of music will grow significantly. The company's objective is to build a repertoire of compelling music targeted to the segment of the market most likely to be the early adopters -- the 18 to 24 year-old age group -- and market and sell the music via the Internet. According to Jupiter, college students represent 34 percent of the Internet users and have spending power of over $200 billion.
Hoffman says GoodNoise is taking a unique approach to addressing this market. "There are many sites focused on selling music on the Internet," says Hoffman, "but up to this point, almost all of the activity has been around physical CDs. GoodNoise is unique in that we focus on the Internet as our primary means of promoting and selling our repertoire. There is already a viable and growing market in place for these recordings that has been largely ignored by the music industry."
Focus on New Music, Consumers and Partnerships
According to Hoffman, GoodNoise has three primary areas of focus. First, as an independent record label, the company is actively building relationships with high-quality modern/alternative rock artists. The company will begin unveiling its initial repertoire of music in the next several weeks and begin selling music via its website (http://www.goodnoise.com) in this summer. GoodNoise's strategy is to attract new artists through innovative contractual arrangements that make the artists "strategic partners," and provide more favorable royalty participation than provided by traditional record company contracts.
The company's second area of focus is to dramatically improve and simplify the consumer's experience of downloading, managing and playing digital recordings. GoodNoise will do this by building and supporting the creation of new technology based on open standards, which will enhance the user experience and promote the growth of the market. Initially, GoodNoise will support a standard known as MP3, or MPEG1, Layer 3 Audio Encoding and Decoding. MP3 is one of a new breed of virtually CD quality audio that has file and stream sizes small enough to be used with modems, ISDN, ADSL, cable modems, and high- speed links.
The third area of focus for GoodNoise is strategic partnerships and acquisitions. GoodNoise will seek additional relationships with key technology and music-related partners that complement the company's vision. GoodNoise also plans to grow its repertoire of music through the acquisition or licensing of other record labels and music catalogs.
Strategic Partnership with peermusic
As part of today's launch, GoodNoise unveiled a key strategic partnership with peermusic, the world's preeminent privately held music publishing company with offices in 25 countries (see separate release: GoodNoise and peermusic Establish Strategic Partnership). As part of its long-term strategy, GoodNoise has established its own music publishing company, which will acquire the publishing rights to certain artists in the company's repertoire. Through the partnership announced today, peermusic will administer, on an exclusive basis, the music publishing rights acquired from the artists in the GoodNoise repertoire. GoodNoise believes that its music publishing business will represent a source of ongoing revenue as the company leverages songs recorded by its artists and published through the GoodNoise publishing organization.
Management Team with Music and Technology Experience
GoodNoise Corporation is advised and managed by a unique group of people from the technology and music industries:
Executive Management Team
Robert H. Kohn, chairman of the board and secretary, is a seasoned high- tech executive, member of the California Bar and one of the nations leading authorities on music licensing and intellectual copyright law. Kohn is the co-author of the 1500 page book, Kohn on Music Licensing, which he co-wrote with his father Al Kohn, retired vice president of licensing for Warner Bros. Music. Kohn served as chief legal counsel for Borland International, Inc., now called Inprise Corporation (Nasdaq: INPR), Pretty Good Privacy, Inc., and Ashton-Tate Corporation. Prior to Ashton-Tate he was an attorney at the Beverly Hills law offices of Rudin & Richman, an entertainment law firm whose clients included Frank Sinatra, Liza Minelli, Cher and Warner Bros. Music.
Gene Hoffman, Jr., president and chief executive officer, is an entrepreneur and high tech startup veteran. In November 1996, Hoffman joined Pretty Good Privacy, Inc. ("PGP") as its Director of Business Development and was later appointed Director of Interactive Marketing, responsible for the company's website operations, strategic marketing relationships, and electronic commerce operations. Prior to PGP, he was Executive Vice President of PrivNet, Inc. where he ran business affairs and technology licensing, performed certain development work for the company, and supervised its merger with PGP. Hoffman has a patent pending for his work with HTTP stream interception technology. Hoffman also worked at IBM's component facility in Charlotte, North Carolina. His musical background includes running a recording studio, freelance music production, band management, and work as a live sound re-enforcement engineer. Hoffman attended the University of North Carolina, Chapel Hill.
Gary Culpepper, executive vice president of Business Affairs, is a seasoned recording industry veteran with more than 20 years experience. Prior to founding a private law practice that specialized in music and entertainment transactions, Culpepper served as senior counsel for Sony Pictures/Columbia/TriStar Home video. Prior to that, he served as vice president of Business Affairs/Music for Paramount Pictures Corporation. His career also includes senior positions with Capital Records, Casablanca Records and Filmworks, ABC Records, Inc. and A&M Records. A member of the California Bar, Culpepper received his bachelor's degree from the University of California, Los Angeles, and received his law degree from Southwestern University in Los Angeles.
Joseph H. Howell, executive vice president and chief financial officer, joined GoodNoise following more than three years as senior vice president and chief financial officer of Merix Corporation (Nasdaq: MERX), a leading manufacturer of high-technology, multi-layer, printed circuits. Prior to that, Howell spent seven years with Borland International, Inc. (now Inprise Corporation) as vice president, controller. He also served as Borland's acting chief financial officer in 1994.
Brett A. Thomas, vice president of Engineering, has worked in the computer industry for over eight years. Most recently, he was principal engineer for Pretty Good Privacy, Inc. (PGP) and Network Associates, Inc., responsible for the design and implementation of PGP 4.5 and 5.0 for Win32, PGP for Unix and PGP's key server software. Prior to PGP, Thomas was a senior engineer for NCR, where he developed that company's check processing software. Thomas' career also includes and engineering positions with MCI, and development work for an insurance company and IBM.
Samuel (Sandy) Pearlman, vice president of Media and Artist Development, is a recording industry veteran, having been a record label president, record producer, songwriter and rock journalist. Pearlman was president of 415 Records, an alternative label featuring Romeo Void, Translator, Wire Train, Red Rockers, Love Club and Manitoba's Wild Kingdom. During the 1970s and early 1980s, he produced recordings for Blue Oyster Cult, The Clash, the Dictators, Pavlov's Dog and Dream Syndicate. He produced the National Public Radio special on Heavy Metal and was a rock critic for Crawdaddy magazine. Sandy owns a recording studio in Mill Valley, California and is a lecturer for the music department at Stanford University and the Film school at California State University, Monterey Bay. He is a Woodrow Wilson Fellow in the History of Idea and New School Fellow in Sociology/Anthropology.
Steven C. Grady, vice president, Corporate Communications, has 10 years experience in communications in the computer industry. His background includes experience in corporate and product public relations, investor relations, international public relations, marketing communications and employee communications. Grady spent six years with Borland International, Inc. (now Inprise Corporation), in a variety of positions including, most recently, director of Corporate Communications. He also served as director of Marketing Communications for Infoseek Corporation, one of the Web's leading search and navigation providers. Grady holds a master's degree in Communications Studies from Emerson College, Boston, and a bachelor's degree in Public Communication from Ashland University, Ashland, Ohio.
Board of Directors
The GoodNoise board of directors includes Bob Kohn, chairman, Gene Hoffman (see above), and Ralph Peer, II.
Ralph Peer, II, chairman and CEO of peermusic, oversees a global network of music publishing and production companies operating from 30 offices in 25 countries. With well over a quarter of a million titles in the company's catalogue, and songs that vary from country, blues, jazz, and pop to Latin, concert, and rock 'n' roll, Peer directs the preeminent privately owned company of its kind in the world. A respected authority on copyright, Peer is vice president and director of the National Music Publishers' Association (U.S.A.) and the Harry Fox Agency. He is a lifetime director and past president of the Country Music Association and served for many years as a publisher/director of ASCAP (American Society of Composers, Authors, and Publishers). Peer is a director of Fox Agency International (Singapore) and a consultant to the board of MCPS (Mechanical Copyright Protection Society, U.K.). He is a past president and a current director of ICMP (International Confederation of M!
usic Publishers) and in 1997 was elected "President d'Honneur" of the Confederation. In January, Peer received the Music Maker award at MIDEM in Cannes.
Advisory Board
The GoodNoise advisory board includes an impressive group of individuals representing artists, technology executives and authorities in the market for downloadable recordings.
Peter Yarrow is a member of Peter, Paul & Mary and is co-writer of such well-known songs as Puff the Magic Dragon, Weave Me the Sunshine, Light One Candle, Torn Between Two Lovers and Day is Done. In addition, Peter co-produced and co-wrote a musical the musical You Are What You Eat and has created a number of children's videos based on Puff the Magic Dragon.
Kevin Kronin is the lead singer of REO Speedwagon and the writer of the songs Keep Pushin', Roll with the Changes and Keep On Loving You.
Lee Jay Lorenzen is chairman, president and CEO of Catalog City, Inc., a popular collection of mail order catalogs offered on the Internet. He is a software industry veteran having been CEO and chairman of Altura Software and a member of the board of Fractal Design, and a co-founder of Ventura Software.
GoodNoise: The Internet Record Company
Based in Palo Alto, California, GoodNoise Corporation is the first record company focused on the Internet as a platform for the sale and electronic delivery of music. With a compelling repertoire of leading-edge alternative and modern rock artists and bands, the GoodNoise website offers music fans an easy and convenient way to sample and purchase great music. The GoodNoise website also features an alternative rock radio station and the latest music news. GoodNoise was founded in January 1998 by a group of veterans from the music and computer industries. More information on the company can be found at goodnoise.com. Artists wishing to submit their music to GoodNoise should contact the company's A&R department at artists@goodnoise.com.
GOODNOISE is a trademark of GoodNoise Corporation. peermusic is a trademark of peermusic.
NOTE: Any forward-looking statements contained in this release involve a number of uncertainties, risks and other factors which may cause the actual results, performance or achievements expressed or implied by such forward- looking statements to materially differ. Factors that could cause actual events or results to differ materially include, among others, the following: market acceptance of the Internet as a medium for consumers to obtain sound recordings, the Company's ability to create, license, and deliver compelling music-related content, intense competition from other providers of music- related content over the Internet, the Company's early state of development, delays or errors in the Company's ability to effect electronic commerce transactions, potential liability for defamation, negligence, intellectual property infringement, and the distribution of obscene or indecent material over the Internet, and other risks inherent in the record industry and associated wit!
h doing business over the Internet. Given these uncertainties, investors are cautioned not to place undue reliance on any such forward- looking statements.
SOURCE GoodNoise Corporation
/CONTACT: Media and Investor Contact: Steve Grady, GoodNoise Corporation,
650-470-2965, steve@goodnoise.com/
/Web site: goodnoise.com
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