Services & Software IPO prices over top of range is making noise, pricing its initial public offering at $28 per share, $2 above the top of its just-upped range.

Even during a pre-offering quiet period, is making noise--this time pricing its initial public offering at $28 per share, $2 over the top of its just-upped range.

The San Diego-based company sold 12.3 million shares, raising $344.4 million.

Earlier today, in a filing with the Securities and Exchange Commission, the music download and news site upped its estimated range to $24 to $26 per share, after raising it earlier this month from the $9 to $11 range.

Analysts, investors, and online music fans have been anticipating the IPO. But questions remain about the long-term business plan for the company, which launched in 1997.'s offering coincides with tremendous activity in the online music market, including IPOs from other Net music firms.

Just today, See related Newsmaker: 
Michael Robertson MTV Networks took a stake in Diamond Multimedia subsidiary RioPort as part of a partnership deal involving content and infrastructure. In addition, Universal Music said it plans to offer content for download when devices that have copyright protection mechanisms become available--expected as early as next month. Universal and Sony also will offer music downloads to retailers via deals with a company called Digital-On-Demand.

Internet music technology firm Liquid Audio went public earlier this month, and its shares more than doubled on the first day. The stock was still trading at more than double its offering price in late trading.

Although the market is excited about Internet music plays, and the increase in's estimated price suggests strong demand for the firm's shares, some analysts still are questioning the company's business model and plans for the future.

The company plans to use most of the money for general corporate purposes, according to filings with the Securities and Exchange Commission. Today's sale represented an 18 percent stake and gave the company a market value of $1.86 billion.

Those figures baffle Mark Hardie, senior analyst at Forrester Research. " [shares are] going to be worth less than $6 in six months," Hardie said today. "It's going to go out huge and then go through the floor. is just not going to be a major player under their current model."

The company's business model in part consists of generating advertising revenue at the site and sales of CDs and other merchandise. It also offers songs for download free. representatives were unable to comment because of an SEC-mandated "quiet period."

According to a filing today with the SEC, the company generated about $1.2 million in revenue last year and $665,785 in the quarter that ended March 31, 1999. Its operating losses were $219,768 and about $1.5 million for those periods, respectively. In addition, the company ballooned from 8 employees as of December 31, 1998, to 142 on June 30, 1999.

Still, the company has generated tremendous buzz as its chief executive Michael Robertson has waged a war of words with the mainstream record companies over MP3, the audio compression format that neither owns nor controls, but which enjoys great popularity among early adopters of music downloads.

Going forward, Hardie said Robertson has described his plan for the firm as "creating an eBay for music," in that similar to the consumer auction site, plans to be "an intermediary between artists and consumers--helping artists get their music to consumers."

But Hardie isn't convinced the strategy will work, largely because hosts music from unknown artists.

"Music isn't like a Chippendale sofa," he said. "You know the name 'Chippendale,' you see the sofa, you know you want it. Music isn't like that. [The plan] shows a lack of knowledge about what they're selling."

Jupiter Communications analyst Mark Mooradian also has expressed concern about's future. "The toughest proposition is getting millions of people to come to your site every day," as has done, Mooradian said in an earlier interview. "There are lots of interesting things they could do."

Still, he said, the company has yet to prove itself, and so far the site's strategy of posting music from unknown artists hasn't shown itself to be worthwhile. "Finding ten great bands is more important than finding 18,000 bands willing to put files up on your site," Mooradian said.'s Robertson has touted his company as a good alternative to the major record labels from the artists' perspective because it doesn't take ownership of the artists' master recordings, which traditional record companies do. But Hardie pointed out that such an arrangement makes it easy for an artist to flee once he or she becomes successful. He also pointed out that doesn't offer the marketing efforts and expertise the record companies have.

"There are no barriers to entry" with the model, Hardie said. "What are they doing that others can't do better, or cheaper, or whatever?"

But even if the model does take off, "a major record label could replicate the model in a minute, and more artists would still go to the majors," Hardie said.

"The majors do write contracts that are very restrictive," he added. "There are a lot of things about the business that are unattractive to artists. But the majors are the engines that drive so much of the marketing, promotions, and image-building that go into building a real career in music. That's one of the painful realities of the business. You don't reach hundreds of millions of consumers without the kind of effort that a record label puts into it."

Bloomberg contributed to this report.