Yahoo! Launches music site - New Services - Brief Article

Information Superhighways Newsletter, Dec, 2001

In this month of music subscription service rollouts, Yahoo! Inc. launched its new music destination, LAUNCH.

However, unlike other services such as Rhapsody, MusicNet or pressplay, the latter two of which are backed by the Big 5 recording companies, the Santa Monica-based concern isn't posing LAUNCH as a subscription service--just a destination offering music downloads and access to videos and radio.

LAUNCH, born out of Yahoo!'s June acquisition of LAUNCH Media, is a site that is designed to bolster Yahoo! Music. It will feature artist interviews and features, music news, photos, etc., like its subscription counterparts. Run by LAUNCH Media co-founders Dave Goldberg and Bob Roback, it can be accessed via the "Music" button on Yahoo!'s home page.

Yahoo! has positioned the announcement as a key way to help entities promote themselves. In this case, the firm said labels and artists will benefit from the exposure. LAUNCH has a sales force dedicated to creating solutions for its advertising and marketing partners, and will also market music-related services, such as PressPlay. In a move uncharacteristic of Yahoo!, it is allowing LAUNCH to operate under its own brand, rather than absorbing it and retaining the Yahoo! Music name. The implication is that Yahoo! has faith in the LAUNCH brand.

"As part of our media & information business, our new LAUNCH destination strengthens our leadership in the online entertainment space," said Greg Coleman, executive vice president for Yahoo!'s North American operations. "The integration will allow us to build deeper relationships with our consumers and provide enhanced solutions for our marketing and advertising clients."

In the broader picture, the move is Yahoo!'s second significant embrace of online music, as the firm also pledged its support for pressplay, a service from Vivendi and Sony. Pressplay recently announced that it would let consumers copy, (or "burn" or "rip") music onto CDs. Analysts say that this is a must in an industry where a key driver will be offering value-added services that differentiate between rivals to hook consumers.

Research firms such as Jupiter Media Metrix have been skeptical, saying that although label-sponsored digital music subscription services will raise the bar in terms of offering the high-quality service that consumers want, they will not provide features necessary to retain long-term customers.

"Label-backed initiatives like MusicNet and PressPlay are doing the right thing by focusing on quality of service as a key differentiator from the free services out there," said Danielle Romano, analyst at Jupiter Media Metrix. "However, these ventures must continue to experiment with new features that consumers want in order to capitalize on the potential market left over from Napster."