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Online music - a hot track
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June 13, 2000: 6:28 p.m. ET
Michael Robertson, MP3.com founder, offers advice to Internet entrepreneurs
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NEW YORK (CNNfn) - Michael Robertson, founder of MP3.com, had this to say Tuesday to entrepreneurs trying to make a living in Internet music: Nobody's making huge profits because nobody's doing it quite right -- yet.
"The online music space is a disaster," he told a crowd of Internet media executives Tuesday at the Streaming Media conference in New York. "There's so much possibility but nobody's making any money."
Making money at an Internet music site, according to Robertson, will require  Internet music executives to dump the formula they thought would bring them untold wealth. Specifically, he said, Internet music sites that act like music stores are not going to be the ones that succeed.
"The opportunity to make money with an Internet music company is taking content and melding it with service," he said.
Robertson was also validating the model of his own company while trying to dish out some practical advice to the hundreds of Internet entrepreneurs gathered in the ballroom of a midtown hotel to check out the latest streaming video and audio technology.
Creating new services may reap rewards
MP3.com is no longer just a site where visitors can download music from the Internet. Robertson has been expanding the range of services that he offers consumers, including creating technology that will allow them to store and listen to their CDs on the Internet.
Selling music on the Internet merely duplicates the kind of music sales businesses that exist outside of cyberspace. Success in that area depends on the Internet taking business away from the brick-and-mortar shops or convincing consumers they need to buy a lot more music.
What he hopes to accomplish, he said, is to create additional streams of revenue. One area in which MP3.com sees an opportunity is to provide music to businesses to play in their shops. Unlike the old-fashioned muzak-style tracks, an MP3-based music system can be customized. A business owner can play a certain type of music in the morning, another in the afternoon and a third type after the business closes for the day and the employees are left to clean. They can even customize their playlist to include announcements about promotions or have advertisements included.
Robertson is also betting that consumers will be willing to shell out to have access to massive music libraries. Already, MP3.com is selling subscriptions to a classical music channel that allows customers to download tracks and create personalized playlists. Soon, subscriptions to pop music, world music and children's music channels will be available.
MP3.com and labels making nice
Robertson only briefly mentioned the agreements, announced last week, between MP3.com and two major record labels, Warner Music Group and BMG Entertainment. The agreement is the result of a copyright infringement filed and won by the Recording Industry Association of America against MP3.com.
He said he saw similarities between the position that record labels hold regarding Internet technology - for example, when the RIAA sued MP3.com -- to that of the film industry in the early days of television. "TV was supposed to kill the movies," he said. "Instead, it created a new revenue stream" because many films are eventually shown on television.
Robertson said he believed the record companies are starting to understand that new technology, rather than damage their business, can create a new revenue stream by creating another delivery system for music.
He also advised budding Internet music entrepreneurs not to focus on the copyright battles, which will undoubtedly continue in the short run, but instead to throw themselves into creating cutting edge technology.
"This is an industry in its infancy. This is still primarily a technology pursuit and not about building a brand," said Robertson.
Instead, he said, entrepreneurs in Internet music businesses would be wise to focus on building content and creating new services that will invite many people to use the site and technology.
"Remember, no Internet company ever went out of business because they had too many users and too much content," said Robertson. 
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MP3.com
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