Selling a Little Net Music: Online CD Sales Sound Sweet, but Start off Slow and Stately

Article excerpt

Online CD sales sound sweet, but start off slow and stately

PITY THE POOR TEENAGER behind the cash register this summer. It's not enough that his job is tedious and low-paying. Now he's the whipping boy in a new digital hype campaign.

When retailers on the Internet talk about the grand promise of electronic commerce, they always Seem to conjure this kid. He has purple hair and various metal objects in his face. He works in the local book or record store. But the only oeuvre he's familiar with is Beavis and Butt-head, and he harbors a vague notion that Paul McCartney is an old guy who used to front for Wings. Not much help if you're looking for some early Miles.

But go online, the cybermerchants argue, and you are instantly greeted by a virtual doctotal candidate in musicology and comparative lit who supplies you with a complete discography and bibliography of your favorite artist or author, locates that obscure title you've been seeking and throws in a couple ofrecommendations that will change your life.

There's some truth to pitch, and that's why music--where customers want lots information and vast selection--is starting to sell on the Internet. In theory, the idea of livering music digitally has a great storyline. Dozens of entrepreneurs have plunged into the business. Rock stars discover they are nerds at heart. But progress has been slow. So far, books--musty, tweedy books--have gotten more high-tech attention.

But music is enough of an online natural that almost wound up selling tunes instead of books. When Jeff Bezos quit his job as a Wall Street hedge-fund manager three years ago to seek his fortune peddling stuff on the Internet, he considered 20 possible products. He chose books, and launched what would become the leading online bookseller, building a brand name (if not any profits yet) and making a fortune by selling shares to the public. Now, though, a flock of Bezos wanna-bes are selling music online, and they could end up transforming the music industry.

None of the music cybersellers has really broken out of the pack yet. CDnow, started by twin brothers in Philadelphia with a $20,000 loan from their parents, is the biggest. Their operation did about $6 million in sales last year, which translates to about one third of the market, according to Jupiter Communications. Then there's the well-funded N2K, founded by record-industry veteran Larry Rosen, who helped build the largest independent jazz label, GRP, and made millions when he sold it to MCA. N2K sells records under musicblvd. com and other monikers, and also handles record sales for WebTV and MTV's site. N2K has its own record label, too. A recent entrant is Tower Records, which has the advantage of a recognizable name.

So far, there's still not a lot of business to go around. Jupiter estimates that online music sales will jump from $18 million last year to $1.6 billion by 2002, but that's still only 6 percent of U.S. sales. So why all the bets on it? The music audience is young and computer-friendly. There's no language barrier. You can play a 30-second sample of a song on your computer with the right software. …