By Richard Menta - 7/09/01
37 Million people stream in and out of Minneapolis-St. Paul International Airport. Now MP3.com will stream the best of its independent core of artists to those millions as they wait to board their flights. Friday, MP3.com announced that the airport has subscribed to MP3.com's Business Music Services, delivering the music of the company's 150,000 artists to travelers passing through the Minnesota City.
While the financial details of the deal were not disclosed, it is a major coup for MP3.com who like other Net entities have been looking for ways to generate additional revenue streams. What is interesting about the company's Business Music Service is that it is successfully taking MP3.com's content to generate income beyond the Web's sphere.
Targeting the traditional Muzak territory without the soft bland music associated with that company, MP3.com looks to stake its claim in the elevators and supermarkets of this country. This arena can be quite profitable. Furthermore, the exposure of its music in such busy venues will serve to promote the artists on MP3.com. Minneapolis-St. Paul International Airport alone offers tens of millions of ears and the deal will further MP3.com's adoption in other airports as well as train and bus stations, which are the company's primary target. It really is an interesting idea, using transportation terminals as the backbone to build a broadcast network out of.
"This will be the largest single venue we have contracted to date." said Bob Simril, vice president of Business Music Services at MP3.com. "We're excited that the more than 150,000 artists MP3.com works with will have the opportunity to expose their music to such an immense and diverse audience. We believe the airport will benefit from the fresh and comfortable sounds they will experience with our service, as will travelers and employees."
Vivendi/Universal should happy with this news. They purchased MP3.com a few months back and are now watching the company work its way to profitability - sans MP3.com's pending copyright suits, which are another story. But, after they think about it for awhile, how happy will they really be?
You as a consumer are walking through the airport headed for your gate and you start to hum along with a tune playing throughout the concourse. The tune is not an offering from Universal's stable of labels that generate income from sales. It's from MP3.com whose music can be downloaded for free.
Universal's own "Net Label" now competes against its regular labels and that is not prudent for profits. If MP3.com Business Music Services continues to propel music into the high-walking traffic venues in this country, Universal will probably step and take control to use this opportunity in their favor. The unsigned and unknown artists on MP3.com could be eventually pushed aside for the narrow target of artists that already feed Universal's bottom line, artists who already dominate radio and music video. Universal will be generous and allow some MP3.com artists to be played, but these artists are not under the same restrictive contracts (yet) and so they won't want to use too many of them.
Big Music has complained for years how they don't generate income from MTV, who they say should be paying them for the right to broadcast their videos. In reality, the record companies pay MTV that's how powerful the exposure on that channel is for an artist.
Radio pays a few pennies to the music publishing houses to air music, but again the recording industry kicks that money back (and more) in a convoluted "payola" scheme through third parties to insure their artists get the most exposure.
The movie companies took control of their fate in the video rental stores by creating their own divisions to release tapes of their movies to the populace. MP3.com has done the same, creating a promotional entity that they own and thus generates profit for the company rather than watch some other company collect those profits. If they had to go through another company MP3.com too might find themselves in a situation similar to that of Big Music with radio and MTV. A situation where they have to grease other people's palms for visibility in airports and train stations.
In that sense, this is Big Music's biggest fear from Net radio in that another MTV will be born, but bigger and just as willing to ask for a check from the record industry. Through litigation and acquisition they are trying to stop that, but again that is another story.
MP3.com saw the potential in targeting Musak's business model. Their artists don't make the MTV or radio rotation and so they needed another mass venue. With the airport deal they may have found it.
The problem is if the deal lives up to expectations, Universal might take it away.
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