Ex-Virgin CEO launches in-store digital delivery

The man who helped guide the Virgin Megastore chain to music retail success has signed his first major retail pact for the digital distribution of recorded music.

Ian Duffell’s New Media Network and Valley Media are collaborating on a music distribution system that will marry broadband technology with retail merchandising.

Freestanding, multimedia kiosks will be installed at various locations, including stores serviced by Valley Media, a distributor of recorded music and video products. Valley services 6,400 companies in 40,000 locations.

New Media will install media stations at three or four locations this summer. “We want different demographics so we can test the concept in different markets,” said Duffell, president and CEO of New Media Network, the same titles he held for Richard Branson’s Virgin Entertainment Group. “One may be a college campus, one would be in a smaller town and then a larger city. It’s a new concept, so different locations are going to give us indications of how people buy music.”

Duffell launched NMN in October (Daily Variety, Oct. 29, 1999) and was linked with eGroove, which began with a concept similar to that of the media station, but will now become a separate retail operation.

Catalog sampling

Consumers would use the freestanding media stations to browse through album titles to be downloaded on demand onto CD-formatted discs. The database lists 10,000 albums from 60 labels. Downloads are expected to take about 12 minutes per album.

Duffell points out two benefits: the ability to download singles and the media stations are what he termed “format agnostic”: “This is not just about CD burning — we can create music on any format that may come along in the future.

“Format changes are a big problem for the industry,” he said. “We (can) adapt to anything overnight.”

Building a better single

Singles are a loss leader for the record industry, with a shelf life of about six weeks. Because NMN’s stations track information on purchasers, record companies will get expanded customer information from singles buyers, and singles sales info would be more readily available than it is currently.

NMN, which would provide installation and management services to Valley-affiliated retailers, will follow the guidelines of Secure Digital Music Initiative or other digital rights management protocols requested by music labels. Details on financial arrangements between brick-and-mortar locations and NMN are still being worked out.

NMN’s lead investor is TVN, a broadband and Internet services provider and integrator. TVN Entertainment is providing the backend and transmission solutions for the NMN satellite-delivery system.

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