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From...

Burn-your-own-CD revolutionaries fight recording industry

September 25, 1998
Web posted at: 11:00 AM EDT

by Lessley Anderson

(IDG) -- MY-CD, a 3-month-old start-up that let customers create custom music CDs over the Internet, closed up shop this month. Net-music professionals are wondering if MY-CD fell prey to fundamental conflicts within the recording industry.

Ed Bennett, the former VH1 and Prodigy executive who served as CEO of MY-CD, says that record company hostility killed his fledgling firm, which was funded by Japanese toy giant Bandai.

"Five companies control 80 percent of all music released today, and they aren't going to license it in the foreseeable future," says Bennett. "We went into discussions with all of them, and their response was, 'You guys could be our worst nightmare.' They don't want people to cherry pick the one good song off a new album but not buy the album, and the artists themselves want absolute control over their material."

These factors certainly raise questions about the fate of many ventures that hope to distribute music digitally - and especially about the other custom-CD start-ups, including Custom Revolutions (Customdisc.com), Music Maker and Seductive.

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Custom-CD companies offer catalogs of new indie rock, classic rock, blues, jazz, country and oldies - and, in the case of Seductive, techno - which customers can then sample, select and have burned onto a CD. The discs cost slightly more than a typical retail CD, and shipping and handling are extra.

None of the companies have current pop hits, because the record companies won't release the chart-toppers. Bennett says that is an insurmountable problem - at least for now.

But David Gould, CEO of Custom Revolutions, begs to differ. He claims his company has pending licensing agreements with two major labels; one deal should be announced soon.

"Bennett is, honestly, wrong," says Gould, who attributes the failure of MY-CD to bad timing and costly overhead. "Custom CDs are a great way for major labels to avoid digital piracy, and do whatever promotion they want to do - break new bands, sell their back catalogs. It's definitely happening."

Although Gould's company also hit roadblocks in securing licensing agreements for billboard hits, Custom Revolutions' approach as a kind of Net marketing arm for record labels appears to have potential. Gould described his company's pending deal this way: "A third-party corporation, not the label and not us, is going to offer custom discs to customers at a premium, if the customer takes a particular desired action."

In this arrangement, says Gould, the custom CD is not totally hand-picked by the consumer, but partially chosen based on preset categories. It's what Bennett calls the Duncan Hines approach to customization. Customers add an egg to the brownie mix instead of making treats from scratch. Not exactly your ultimate fantasy party mix, but not necessarily business failure either.

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