Tower and MP3.com In Music Delivery Deal

Tower Records and MP3.com announced a deal Wednesday that will provide customers with immediate online streaming access to music they purchase from TowerRecords.com, and eventually Tower Records brick-and-mortar retail stores.

The agreement to extend MP3’s “Instant Listening” service to Tower was made possible by recent court decisions clearing the way for MP3.com to offer licensed record content. The service is expected to debut in January.

Tower senior vice president Mike Farrace told the E-Commerce Times that Tower had been working on the deal with MP3.com for some time, but waited to close the deal until MP3.com had the ability to offer licensed content.

“We felt the record lawsuits would be worked out,” Farrace said. “The last thing we want to do is see artists shortchanged. We weren’t interested until licenses began to be set up with the record companies.”

Leveraging the Brand

Industry analysts reportedly believe that the deal legitimizes MP3.com’s instant listening service, and may open the gates for record companies to reach similar agreements with other instant listening service providers.

Tower is not the first record company to reach an instant-listening agreement with MP3.com, but it is the retailer with the highest profile. With 115 stores in the U.S. and 72 international locations, Tower is one of the largest music retailers in the world. Fiscal year 2000 sales for Tower totaled US$1.1 billion.

“Essentially the user goes to our site, buys a CD, and then they are given an option to have it added to an instant listening account where they can listen to a streamed version of the CD before it arrives,” Farrace said.

Banner Week

Tower Records.com was also named the top online music seller by a Forrester Research survey released Tuesday, finishing ahead of Amazon.com. Tower’s strong brand name and revamped customer service has enabled it to generate a strong presence on the Web, Forrester said.

MP3 and Tower hope that the deal signals the beginning of a new way of shopping for music.

“The whole idea of integrating commerce with digital technology has a ways to go,” Farrace said. “These are some first steps, and the first of many digital services we’ll be offering. You have to start with the obvious, and this was a no-brainer for us.”

Tuesday, MP3 announced that it was relaunching its music downloading service, My.MP3.com, giving users a choice of accessing a free, advertising-supported service or a subscription-based service costing $49.95 per year.