The major music retailers in the US have joined together to enter the legitimate digital download business. Best Buy, Tower Records, Trans World Entertainment, Wherehouse Entertainment, Virgin Entertainment Group and Hastings Entertainment have together acquired a controlling stake in an LA-based download subscription service called Echo Networks which has been trying to build an online customer base through internet radio stations. The retailers will now attempt to secure licences with the major labels to sell their music via the service, which will operate in its own right, and as part of the existing online activity of each partner company.
It is another development in what is likely to become a very competitive market place – because while media attention is focused on the battle against illegal download services, the number of legitimate download sites is on the increase with various parts of the music industry hoping to cash in if and when legitimate downloading becomes big business.
The record labels themselves have invested in such services – Pressplay and MusicNet. A number of media outlets have added retail dimensions to their online activity with a bid to moving into the download business. And of course there are the survivors of the dot.com era – Vitmanic and Peoplesound – whose long term ambitions surely involve utilising their large lists of music fans to sell MP3s.
But the music retailers, who will lose more than anyone if digital music takes off, are hoping that if they can get the technology up and running and licences signed with the record labels they can take over the new market, utilising the high profile of their brand names among consumers aided by their physical presence on every high street.
"The Echo consortium was established to create a viable business strategy that combines physical and digital music distribution," the group’s Dan Hart told reporters. "With competitive licenses, music retailers can utilize their long history and expertise in building customer relationships, marketing music and breaking new artists to provide a digital music experience that truly serves the consumer."
The record labels would love, of course, to cut out the retailers in a digital age and sell direct to the consumer via their own download services. But the retail sector still has considerable control over the music industry and should be able to negotiate licences with the major labels that will put it in a good position to dominate the download market when it truly takes off (if the 'pay to download' market ever truly takes off).