Loudeye, Microsoft team on music store

Digital music services provider Loudeye and Microsoft announced that they have teamed to promote Loudeye's new service that helps other companies set up online music stores much like Apple Computer's iTunes. Seattle-based Loudeye and the software giant said Monday that they will work together to handle the infrastructure and distribution for online music services branded by other companies that are looking to sell songs online or to enter the digital media business in some other way. Loudeye's digital music services, which include its Digital Music Store and iRadio Service that contains 100 preprogrammed music channels, are based on Microsoft's Windows Media 9 Series technology. Early customers of the service include AT&T Wireless and Gibson Audio, a division of Gibson Guitars.

"The problem for companies that want to launch a digital media service with their own brand is that it's very expensive," said Loudeye Chief Executive Officer Jeff Cavins. "We'll charge them a fraction of the cost of what it would take to build it themselves." Loudeye's plan highlights the growing presence of legal downloadable music, just eight months after Apple launched its iTunes song store. Many, if not most, of the large online shopping or entertainment destinations have announced plans to offer their own stores. In addition to Apple's launch of a Windows version of its store, Buy.com founder Scott Blum has created BuyMusic.com, Roxio has launched Napster 2.0, Musicmatch has turned its jukebox and radio service into a song store, and subscription service MusicNow has added a store.

Microsoft also has said it will enter the market next year. Wal-Mart Stores is expected to launch a store later this month or early next year. Computer makers Dell and Hewlett-Packard are co-branding other companies' services. However, the profit potential for these services remains dim. Apple has stated that it does not make money from iTunes, relying instead on the service's ability to drive demand for its iPod digital music player. Other industry executives have said that profits are possible, even if they are razor-thin.

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