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From...

Make custom CDs online, while the record companies still let you

May 27, 1998
Web posted at: 12:30 PM EDT


by David Pescovitz

(IDG) -- Good song, lousy album – and too bad, because you paid for it. You're down $14.99, and yearning for the bygone days of the vinyl single.

In 1987 a company called Personics tried to give music lovers a bit more choice by setting up custom-made compilation kiosks in record stores. You picked the tracks, and a few minutes later a cassette popped out, complete with laser-printed cover art. Not surprisingly, major labels weren't too keen on consumers picking and choosing tracks instead of buying full-length albums. As a result, Personics went belly-up in 1990. Now the experiment continues, only in a different setting – the Web.

A half-dozen services have set up shop to sell custom-made mail-order CD compilations via the Internet. The most recent entrants include Custom Revolutions and MY-CD, which was cofounded by former VH-1 president and Prodigy CEO Ed Bennett. They want a piece of the online music market, which Jupiter Communications predicts will grow from $71 million last year to $2.8 billion in 2002.

The premise is simple and alluring: Search or browse an online catalog of thousands of licensed songs, listen to the tunes using RealAudio, and click your picks. The CD shows up on your doorstep in a few days for less than $20.

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"We feel that there are millions of people out there who aren't buying music because they aren't going to buy the full-length album," says Melissa McKinnon, VP of marketing for the CD compilation retailer SuperSonic BOOM, launched in January 1997. "Customized CDs will greatly increase the audience size."

Still, the problems that plagued Personics haven't gone away. While custom-CD compilations may indeed appeal to radio audiences only interested in the hits, it's unclear how much a compilation service would undermine the traditional full-length CD retail market. That's why you won't find tracks by Pearl Jam, Madonna or other artists from major labels on the custom CD sites. "At this point, I think you'll find that every owner of a large repertoire is reticent to hand over master recordings to anyone," says Roy Gatenella, VP of marketing for EMI-Capitol Entertainment Properties. "Those masters are our only assets. But, that doesn't preclude us from doing business with custom CD sites on a case-by-case or promotional basis." As a result, the custom-CD compilation industry is trying its best to spin that bug into a feature. Traditional music stores have a limited amount of shelf space, the industry points out, so the massive number of new recordings being released each week leaves little room for "oldies" – or even "indies."

"All of the majors and indie labels have huge catalogs, so our service offers an opportunity to remarket songs that have already been released by making the music available in a new form," says CEO Bob Bernardi of Music Connection, which launched the Musicmaker.com custom-CD site late last year. McKinnon sees a parallel between custom CDs and movie rentals. "Obviously, they don't put the movies in Blockbuster at the same time they release them in the cinema," she says. "Our strategy would be that after artists have had their debuts and the numbers start slipping, they'd license the songs to us. And the labels would want to capitalize on the marketing dollars they would've already spent, so they could say 'OK, here's another push, now it's available for customization.'"

While the custom-CD industry sweats it out waiting for major labels to sing, CDuctive, launched in December, is carving its niche below the mainstream radar – in ground that may prove more fertile for consumers who want to roll their own CDs. The company's focus is electronic dance music, for which success results more from club play and word-of-mouth than mega-marketing bucks.

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