CDnow acquires custom CD firm

Net music retailer CDnow today announced it has acquired Net custom CD firm SuperSonic Boom, part of a few recent investments aimed at broadening its reach into the ever-more-crowded and competitive Net music space.

SuperSonic Boom, which has been on the Web since January 1997, allows users to preview songs via RealAudio and create customized CDs. The firm makes or "burns" the CDs and ships them to customers. It also pays royalties to the copyright holders of the songs selected.

Under the terms of the deal, SuperSonic Boom becomes a wholly owned subsidiary of CDnow, according to Julie MacKinnon, chief operations officer for SuperSonic Boom. Financial terms of the deal were not disclosed. SuperSonic Boom's features and technology will be integrated into CDnow's site, and CDnow will expand its marketing to include the new functionality, the firms said.

CDnow representatives were not available for comment.

But critics of the custom CD sites--which also include My CD, Musicmaker, Volatile Music, and CustomDisc.com--note that the sites don't offer current mainstream hit songs, because record labels will not release individual titles from CDs they are spending millions of dollars to market.

"The business that SuperSonic Boom is in is not one that the music business is the least bit interested in," said Mark Hardie, senior analyst at Forrester Research. "When you talk to music industry people about SuperSonic Boom, they just laugh.

"[The record labels] are content to let SuperSonic Boom get a hold of all the little electronica stuff," he added, noting that the electronica genre doesn't yet have a wide enough following that it would hurt the labels to release individual songs to custom compilation sites.

Where Net music retailers have an advantage is in the amount of space the Web offers vs. the limited shelf room its brick-and-mortar competitors have. Some Net music buyers use the custom compilations sites because they offer "access to titles that you can't get when you walk into a store," Hardie said. CDnow can use SuperSonic Boom's catalog and its functionality as an add-on to differentiate itself.

Other Net retailers also have leveraged the space advantage--most notably Net bookseller Amazon.com, which touts itself as "Earth's biggest bookstore." Amazon is readying its own online music sales effort, joining competitor Borders, which recently launched its Net store that sells books and CDs. CDnow and others no doubt are beefing up now in part to stay competitive against the formidable Amazon as it enters the Net music space.

Moreover, CDnow is the first among the Net music retailers to offer the custom service, which could give it some headway in the race to garner users.

"CDnow's hope for success is to be the point of sale" for Net music, Hardie said. "It's shown no real proclivity toward providing content. You go there to buy something."

Noting that CDnow competitor Music Boulevard has the advantage of being part of the Music Boulevard Network that includes content sites such as Rocktropolis and Jazz Central Station, Hardie said: "[CDnow] needs to be the button to click on to buy CDs.

"Just because CDnow won the first lap doesn't mean the race is over," he added. "I think the race has just begun."