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Net music gets louder next week

Players in the Net music space will gather for Jupiter Communications' Plug.In conference in New York, which begins Monday, just as the market gets ready for MP3.com's initial public offering.

Internet music companies will be making a lot of noise next week.

Players in the Net music space are gathering for Jupiter Communications' Plug.In conference in New York, which begins Monday, just as the market gets ready for the much-anticipated MP3.com initial public offering, expected next week.

Both events come during a tumultuous time in the online music space--and on the heels of a number of successful music-oriented initial public offerings. With all the activity, the Plug.In conference, which is the fourth annual Net music confab for Jupiter, has attracted "more than twice the paid attendees from last year," according to Mark Mooradian, director of consumer content strategies for Jupiter. In all, the firm is expecting about 1,500 people.

"Things are evolving very rapidly" in the online music space, Mooradian said today. "This medium changes the dynamic in every type of relationship that exists today in the music industry."

All sides seem to agree that the catalyst for the sweeping changes in the music business has been MP3, an audio compression format that allows users to easily download high-quality audio files to a computer hard drive or portable device.

Its ease of use has caused it to gain tremendous popularity among early adopters, but its lack of copy protection has raised the ire of the mainstream record companies, which have been criticized by many for being slow to embrace the Web as more than a medium for marketing artists and selling CDs.

For its part, MP3.com earlier this week changed its IPO tune, increasing the number of shares to be offered by 3.3 million, upping the price range to 16 to 18 from 9 to 11, and disclosing that French Internet fund Group Arnault will buy about 27 percent of the shares being offered.

Though MP3.com chief executive Michael Robertson was scheduled to appear on the MP3 panel, he had to back out because of a Securities and Exchange Commission-mandated "quiet period," Mooradian said.

Shares in music technology firm Liquid Audio, which went public earlier this month, more than doubled from 15 to 36.56 in its first day of trading. It was up slightly in midday trading today, rising 0.13 points to 32.13.

Musicmaker.com, which allows consumers to create customized CDs online, also saw its shares fly in its trading debut, rising nearly 70 percent in its first day from 14 to 28.13. Its stock was up 8.53 percent, or 1.56 points, at 19.875 in midday trading today.

Along with the audio IPOs that have sounded off of late, the Net music space has seen a number of high-profile deals and events in the past few weeks. The music industry-led Secure Digital Music Initiative (SDMI) published specifications for secure music downloading to portable devices, and Columbia House and CDnow merged, for example.

In addition, as expected, Virgin Megastores introduced a service that allows customers to create CDs out of music that is downloaded from the Net using kiosks.

The two-day Plug.In conference will address issues ranging from the future of record labels and retail to technical standards and the changing nature of the artist-label relationship, Mooradian said.

Dave Goldberg, chief executive of Net music firm Launch Media--which is fresh from its own IPO in April--is speaking on a panel at the conference on Tuesday, titled "MP3 & Digital Distribution: Threat or Opportunity?" He said today that he is expecting "a lot of fireworks" on the panel.

"There's a lot of confusion about music and the Internet out there right now," he said. "Hopefully there will be more informed discussion when we're all together."

As for the MP3.com IPO, Mooradian said he expects it to be a topic of conversation among attendees, but one of many.

"You can't put that many people in a room that are [in the online music business] and not have them talk about it, but whether SDMI will work or fail is more on the top of everyone's mind than the MP3.com IPO," he said.

As for the IPO itself, Mooradian said he expects it to "follow suit" with other recent Internet offerings.

"I'm bearish on MP3.com's business model to date. I'm bullish on what they've done with their audience so far," he said.

"The toughest proposition is getting millions of people to come to your site every day," as MP3.com has done, he added. "There are lots of interesting things they could do. They could bring A&R [artists and repertoire, record label talent scouts] into the mix; they could bring an editorial point of view into the mix--which is important if you want to be an 'online label.'"

But so far, the site's strategy of signing on as many bands as possible doesn't show much promise, he said. "Finding 10 great bands is more important than finding 18,000 bands willing to put files up on your site," he said.