Tunes.com Poised to Grow as MP3 Debate Rages On

the South by Southwest Interactive Festival proved anything, it’s that the future of music distribution is rather unclear. A Tuesday panel on the MP3 debate, which featured Michael Robertson, the founder and CEO of MP3.com, and Paula Batson of AT&T, quickly turned into a heated debate with spectators verbally attacking those on both sides of the issue.

A few days earlier, Broadcast.com (Nasdaq: BCST) president Mark Cuban had declared that this argument may not matter much longer because he feels MP3 will probably will be absorbed soon by Microsoft (Nasdaq: MSFT) or RealNetworks (Nasdaq: RNWK). Cuban also argued that the pay-by-download format won’t work.

Meanwhile, artists like Todd Rundgren are taking matters into their own hands by letting fans underwrite their music and pay a subscription to download music in progress and participate in exclusive chats. But other artists like Sheryl Crow say they love making albums too much to stop.

Nobody knows what’s going to happen to the music industry, but what seems clear is that newly launched music hub Tunes.com is going to influence online buying habits. Tunes.com, which launched earlier this month, features one of the Internet’s largest aggregations of music content, including more than a million song clips from 350,000 albums and more than 1,000 full-length videos. The site also features content from Rolling Stone, hip-hop magazine The Source, and Down Beat Jazz.

Numerous Options for Customers

“We want to be agnostic about e-commerce,” said Jo Sager, Tunes.com’s vice president of marketing.

What this means is that the Web site is going to support all sorts of e-commerce retailers, and embrace digital distribution, as well as the CD format. Tunes.com’s various pages sell items through Amazon.com, CDNow, Valley Media, Columbia House, CompareNet, the Audio Book Club, Crutchfield and Barnes & Noble. Tunes.com is also expanding its MP3 presence and will eventually let unsigned artists upload their own songs to the site for free.

Sager says that music fans are smart, and they deserve shopping choices.

“Some of them might want to buy everything at Amazon because that’s where all their [credit card and shipping] information is stored,” she said. “But some of them might just want the best price.”

Poised to Grow

Sager says that Tunes.com is exploring various e-commerce models, from selling subscriptions to content or selling individual singles.

Tunes.com already has more than 1,000,000 unique users, as does its partner Rolling Stone Online and it looks to grow rapidly. The CD player that comes with Windows 98 is full of links to appropriate parts of Tunes.com. For example, if a user puts in a Bob Dylan CD, the player will find links to pages about Dylan.

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