NEW YORK (CNNfn) - Shares of digital music software firm Liquid Audio Inc. more than doubled in its first day of trading Friday, exemplifying investor enthusiasm for online music distribution.
Liquid Audio (LQID) shares closed at 36-9/16 on the Nasdaq stock market, up 21-9/16 from an offering price of 15. The Redwood City, Calif. firm raised $63 million in the offering of 4.2 million shares.
Liquid Audio's software lets consumers play music downloaded from the Web in digital format. The company also lets musicians and record companies promote music on its Web site, which customers can preview, then download for a fee if they choose.
The company's software provides an alternative to the popular MP3 digital music format, though it plans to offer MP3 support later this year. Several companies, including Amazon.com Inc. (AMZN), barnesandnoble.com (BNBN) and TowerRecords.com, use the Liquid Audio player for digital samples of music sold on their Web sites.
Liquid Audio counts billionaire venture capitalist Paul Allen's Vulcan Ventures and Intel Corp. (INTC) among its investors.
Digital music distribution has been a source of controversy, as record labels fear widespread piracy and copyright violations. But the format is gaining widespread popularity among consumers and acceptance among recording artists, who view digital music as a new promotional tool.
Forrester Research predicts that the U.S. market for downloading digital music from the Internet will reach $1.1 billion by 2003.
With all that in mind, a group of record companies and technology firms tentatively agreed last month to a set of standards for preventing the spread of pirated music in digital format.
The digital music distribution field is getting crowded. Earlier this week, musicmaker.com (HITS), which allows consumers to create and order personalized CDs online, rose 71 percent in its first day of trading. Online music distributor MP3.com is scheduled to go public next week.