NEW YORK (CNN/Money) - MusicCity.com plans to relaunch the file-sharing software site to become a revenue-generating venue for unsigned artists, the company's CEO said Thursday.
In its preview edition, the site will promote the songs of 10 independent artists, giving users the ability to sample and purchase the music -- the latest move in the debate between the recording industry and file-sharing companies over who should financially benefit from the swapping of music files online.
The company plans to incorporate its "wrapping" technology to the site on April 1, which will allow the participating artists to decide how many times the listener can sample a song before paying for it and how much it will cost to download.
"MusicCity is the first site for independent artists where listeners can sample their music and buy it, " said Steve Griffin, CEO of StreamCast Networks, the parent of MusicCity.com.
Previously, the site only housed the software that enabled users to share files. The new site will still run on the same technology, but users will be directed to a separate site, Morpheusos.com, to gain access to the software.
The company plans to take 30 percent of the revenue made from song or album downloads off the site. The artist would take the remaining 70 percent. The price of downloading one song currently ranges from 50 cents to $1.50, at the musician's discretion.
"We think the artists and the songwriters should keep the bulk of the money," said Griffin. "We are trying to be part of the solution."
Though this site will allow the user only so many test runs before purchase, the company's file-sharing technology still allows users to transfer other songs and files between each other free of charge.
In so-called peer-to-peer file sharing, people pass files to one another over their computers without the need for a central computer, or server. Companies such as Nashville, Tenn.-based StreamCast and New York City-based LimeWire say they intend to make a legitimate business from the technology -- and StreamCast says this is its first move.
But some analysts don't see the model as proving successful -- citing the previous failure of MP3.com to survive on unsigned artists alone. The site eventually branched out to include the work of popular musicians on top record labels.
"I think that having a direct channel for independent artists is a great thing," said Chris Kwak, an Internet and infrastructure services analyst at Bear Stearns. "But it's a model that's been proven difficult to generate revenue. It's a tough thing because the vast majority of users go to download popular music -- they are going to find a limited audience."
So far these file-sharing companies have not been found to violate copyright law. But the Recording Industry Association of America recently filed a lawsuit against MusicCity.com and other sites, alleging infringement.
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Last year Napster, a company that allowed free online music-sharing through a central server, was effectively shut down after a federal judge found the company in violation of copyright laws.
"We're aware of the possibility, but until we've had a chance to look at the new service, we have no comment," said Amanda Collins, RIAA spokeswoman. "We want to look a little more into it -- to see the details of what they are proposing."
The first featured group on the MusicCity site, a sister act named "Debutante," plans to charge 99 cents for a single download of a song. The MusicCity site will also direct listeners to the duo's own Web site, where customers can buy their album directly.
"It offers [Debutante] the opportunity to do what they want to do with their music, which is to get it in front of a lot of people in a fairly cost-effective way," said Duff Berschback, a Nashville, Tenn.-based entertainment lawyer representing Debutante. "It's a big step forward in accomplishing that goal."
The MusicCity team thinks the new site will add to the company's financial success. "We are breaking even financially," said Griffin. "It's a powerful revenue model with the new deal."
The independent music site adds another revenue dimension to the company's intake from ads, services and other e-commerce. Griffin said the company expects to officially break even in the first quarter of 2002.