Virgin joins the online music bandwagon

Sue Zeidler

LOS ANGELES: British entrepreneur Richard Branson's Virgin Group Ltd became the latest company to throw its hat into the online music ring by launching the Virgin Digital service.

Virgin Digital, at http://www.virgindigital.com, combines a 99-cent-per-song download store, a $7.99-per-month subscription service, streaming radio and portable device management tools.

Virgin joins an increasingly crowded market. It includes services and download stores like Apple Computer Inc.'s popular iTunes Store, Microsoft Corp's newly launched online store and offerings from RealNetworks Inc.'s Rhapsody and Roxio Inc.'s Napster.

Yahoo Inc. this month also bolstered its position by spending $160 million for Musicmatch.

"We don't see this as crowded," Zack Zalon, president of Virgin Digital, said in an interview. "It's not saturated at all and there is tremendous growth potential."

Zalon said Virgin was taking a long-term approach. "We don't care about winning next week or next month. We plan to be a significant player in five years."

Virgin Digital officials expect its brand name and retail store following to help jump-start the service. Other Virgin entities will serve to help get the word out.

For instance, Branson's new reality show, "The Billionaire: Branson's Quest of the Best," debuting on News Corp. Ltd's Fox Network in November, will help promote the service, executives said.

Featuring more than 1 million tracks, the download store provides licenses for playing, burning to CDs and downloading to about 50 portable music devices.

The Virgin Digital Music Club subscription service, for $7.99 per month, gives users unlimited access to more than 100,000 on-demand albums. Radio Free Virgin, an online radio service, is also integrated.

Officials also touted an "Ask the Expert" feature providing customer support. "It's like walking into a retail store and asking a highly knowledgeable salesperson for help," Zalon said.

Virgin Digital said it will also offer the service outside of the United States, but no dates have been announced.

David Card, analyst with Jupiter Research, which projects the commercial online music market in the United States to grow to about $1.7 billion in 2009 from about $100 million in 2003, said Virgin would get a bigger boost from its brand in Britain than in the United States.

He said the market would still see new entrants.

"I don't think Virgin is too late or anybody's too late," he said. "There's a lot of noise out there and there will be more entrants before there are fewer."