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MP3 drops needle on retail music

Netco to provide shopping tunes

HOLLYWOOD — The background music that haunts you during your trip through the grocery store may soon be supplied by one of the most controversial companies in digital music.

San Diego-based MP3.com on Tuesday launched a retail music division, which will provide technology for retail establishments to play from the Netcaster’s selection of digital music.

The music will be sent to retail subscribers via the Internet, where users can modify their playlist from a private account page.

MP3.com did not reveal how much the service will cost, nor what retailers have signed on to use the service. Calls to the Netco were not returned.

“We estimate that retail music licensing exceeds $500 million annually, and to properly capitalize on this opportunity it was imperative to form a distinct business division,” said Michael Robertson, chairman and CEO of MP3.com. “The architecture MP3.com constructed to serve its millions of music fans helped us identify, build and leverage this additional new growth opportunity.”

Mixing in ads

MP3.com execs said subscribers can insert house and merchandiser ads amid the music that is downloaded from MP3.com.

“Subscribers will appreciate substantial savings over what is currently offered, and our state-of-the-art music delivery and ad management tools will afford them control and flexibility that was not previously available,” said Bob Simril, veep of retail music services.

News ups share price

Shares of MP3 rose almost 3% on Tuesday, closing at $11.88. The 52-week high for the company is $105.

The retail music service provides a potentially lucrative revenue stream for the Netcaster, which has been battered recently in the courthouse.

The Netco’s my.MP3.com service attracted the ire of record labels, which claimed in a suit filed by the RIAA that the service violated copyrights by allowing users to create a personal database of digital music that could be accessed at any time for listening. Earlier this month a federal court ruled in favor of the RIAA.

When the judgment was made, MP3 execs said that 80% of the company’s revenue comes from advertising.

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