Virgin Joins Online Music Fray

By David Worthington, BetaNews

September 27, 2004, 7:28 PM

Sir Richard Branson has dabbled in everything from music to hot air ballooning to operating a trans-Atlantic airline - even space tourism. That said, it should come as no surprise that Branson did not want to be the last one on the block to own an online music store.

Branson's Virgin Digital service, which is available as a free download, capitalizes on the strength of the Virgin record label to offer customers a "virtual Virgin Megastore" stocked with over 1 million songs for download.

With the launch of Virgin Digital, Branson joins a crowded marketplace that is currently dominated by Apple's iTunes Music Store. iTunes hold a solid 70 percent share of the market with the remainder divided up among of a crowded field composed of RealNetworks Rhapsody, America Online's MusicNet, Microsoft's MSN Music Store, Roxio's legalized Napster service, Yahoo's MusicMatch and retail giant Wal-Mart.

The Virgin Digital service features music downloads, a music club subscription service, streaming radio, support for over fifty portable music devices, and new music discovery options that are a throw back to the days of the all-knowing record store veteran.

"Virgin stands for innovation, fun, and an absolute dedication to customer value," stated Sir Richard Branson, founder of the Virgin Group of companies. "We worked directly with passionate music fans around the world and together we’ve come up with a digital music service that truly defines the Virgin energy and spirit. It's time for a digital music revolution!"

Virgin's desktop software is a typical jukebox-style suite that rips, encodes and burns CDs; imports digital audio; creates custom playlists and supports portable music devices that are compatible with Microsoft's "Plays for Sure" software. What is atypical about Virgin Digital software is its rich music discovery features.

Virgin Digital is attempting to bridge the disconnect between itself and its customers by offering an "Ask the Expert" function. The product interfaces directly to customer support where highly knowledgeable salespeople are waiting on the other end of the line to assist customers in their music choices. Another feature Virgin dubs "3-D browsing" fetches related content including album credits and artist biographies.

Unlike iTunes, the market leader, Virgin has opted for a subscription-based pricing model; although, singles can still be downloaded for 99-cents USD each. The Virgin Digital Music Club runs $7.99 USD per month with access to over 100,000 albums on-demand. All users receive complimentary access to Radio Free Virgin. Music is encoded in the Windows Media 9 format.

Jupiter Media Vice President and Senior Analyst David Card has predicted that the early momentum for individual music downloads will eventually be surpassed by subscriptions somewhere within the 2007-2008 timeframe.

"While growing, the market for digital downloads and subscription services is nascent. For the foreseeable future, the CD will remain the entrenched, dominate means by which people consume music. Where stores like iTunes, MSN or Virgin make most sense: Augmenting existing sales channels and offering vendors a way of extending brand awareness," Senior Jupiter Analyst Joe Wilcox told BetaNews.

Wilcox continued, "So for Virgin, the online music store isn't so much about competing with Apple but extending the existing customer experience, by providing another place to discover and consume music. Remember that Virgin has retail stores where the company attempts to build a certain type of community experience and, so, customer loyalty. I see the online store as an attempt to extend the approach to digital downloads and services. Hence, the company refers to the online operation as a 'Virtual Virgin Megastore' where customers can use media player tools to consult with sales staff with music questions or buying advice."