So in its latest move to give music lovers what they really want, EMI has signed a licensing agreement to stream its music video library over the Net through Launch Media, which had 2.1 million registered users as of September.
By giving consumers access to artists' current and past videos online, EMI could revive interest in old tracks while creating a fresh sales outlet for new music.
EMI, the third-largest music company in the world, already pushes CDs online and plans to supply its retail partners with digital singles. Consumers will be able to download the singles via the Net or brick-and-mortar stores to play through their computers, portable devices such as Walkmans, and eventually car and home stereos.
"What is most important is that Launch provides new promotional channels to bring our artists closer with the fans--we're trying to be everywhere the music fans are," said Jay Samit, senior vice president of new media for EMI.
Net music sales could hit $5.2 billion in 2005 from about $170 million last year, according to a report this month by Music Business International, the latest in a string of reports pumping the Net music sector.
EMI's deal with Launch reflects this market potential and a fundamental shift in how music is being marketed and delivered through the Net. It also signals how the entrenched recording companies are reckoning with this fast-paced evolution in consumer behavior.
EMI is not the only "Big Five" record company pushing forward its digital music strategy. BMG Direct, a unit of BMG Entertainment, today launched Download Central to let members of its music club preview and download more than 50,000 songs encoded in Liquid Audio's format by artists ranging from Beck to Emmylou Harris. Some tracks are free, others cost between $1 and $2.
With the EMI deal, Launch will get a plethora of content by popular artists, adding to its collection of videos, album reviews and digital downloads by chart-toppers such as Britney Spears and the Backstreet Boys. The videos can be played using software by RealNetworks and Microsoft. Launch will next try to secure a similar video streaming contract with Sony Music, which has used Launch for past promotions, the company said.
The deal also means new revenue streams for Launch.
Like many Net companies, Launch is losing money as it tries to build its brand. The company, which went public in April, posted a loss of $9.29 million in the quarter ended Sept. 30, while its revenue rose to $5.28 million from $2.63 million a year ago.
EMI took a small equity stake in the company today, although the size of the investment wasn't made public. When EMI's digital singles hit the market, sites such as Launch are expected to get a cut of the sales they generate.
"We provide music listeners all the content they want, and one of those things is video," said Dave Goldberg, CEO of Launch. "We sell advertising against those users, so the more videos we have, the more users we have. We also are in the process of negotiating with a third-party retailer who will have the store within our site."
For EMI, putting its video archive online isn't a groundbreaking idea. The Net already has proven to be the place where consumers go looking for rare and older CDs, for instance, because the retail stores don't have the space or financial incentive to store such products.
"Amazon.com has sold more different [CD titles] than any retail chain in the world," Samit said. "It's not selling more volume, but they are titles that normally wouldn't be stocked in stores and artists that wouldn't have seen that revenue--this is a good thing."