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N2K tries multifaceted promotion

The music firm is combining custom CD sales, offering a bonus track for download, and other services in one Miles Davis promotion.

The search for a formula to make money selling music on the Net got a boost today by Net music firm N2K.

The company's retail site Music Boulevard is combining custom CD creation, online downloading of music, and sampling of music over email in a Miles Davis promotion. Fans can create a custom Miles Davis CD, then download a bonus track using Liquid Audio technology. N2K also will send 15-second Miles Davis song samples "to a targeted group of consumers via email" using technology from a2b Music, the company said.

Taken individually, custom CDs, downloading of music online, and even retail sales of existing CDs have not proven profitable up to now. N2K itself posted a greater-than-expected loss of 18 cents per share last quarter, according to a report from First Call. Now the firm is upping the offerings ante, trying to combine many features within one promotion to draw customers.

The idea is to "offer a package to fans to get the music they're interested in in just about any form," said David Pakman, vice president of business development for the Music Boulevard Network, which comprises all of N2K's online operations including the Music Boulevard store as well as content sites such as Rocktropolis and Jazz Central Station. N2K also operates the official Miles Davis site under an agreement with Davis's estate.

Under the promotion, Davis fans can create custom CD compilations of his music, courtesy of Music Connection's Musicmaker.com custom CD site and Fantasy Records. Users can listen to more than 100 samples and choose up to 10 songs or 70 minutes' worth of music for their CD. The cost is $15.95, including shipping. Users who buy a CD can download a track from the upcoming CD Endless Miles: A Tribute to Miles Davis, to be released by N2K record label arm N2K Encoded Music.

Although there is a lot of speculation about an upcoming boom in online sales of music--both of traditional CDs and the delivery of music online via downloading--many analysts are skeptical about the market for such sales.

Last month, for example, research firm Jupiter Communications predicted that sales from downloads of music online would reach only a paltry $30 million by 2002, or 2.2 percent of total online music sales.

Pakman argued that analysts nay-saying online music delivery don't take into account the "amount of activity" in the MP3 (MPEG 1, Audio Layer 3) community. MP3 is a format for delivery of CD-quality music online that is popular among Net users, but feared by the record industry because of its open nature. MP3 is a favorite format among pirates, and countless illegal copies of songs can be found on MP3 sites and in newsgroups all over the Web.

Pakman said music sharing in MP3 format is popular "not because it's free, but because people think [downloading music] is cool," adding that "there aren't many companies presenting legal alternatives to customers."

Still, the skepticism about the promotion stretched to other areas as well.

"I seriously doubt [N2K's Miles Davis promotion] will make any more money than the regular trickle that comes in from Miles Davis's music," said Mark Hardie, a senior analyst at Forrester Research. "It's going to appeal to a small, rabid base of Miles Davis fans."