MCI Faces Music, Will End Online Sales

MCI Communications Corp. will close its electronic music retailing business Dec. 31, only weeks after winding down its much-touted marketplaceMCI online shopping venture in the face of poor sales.

MCI’s retreat is one of the most prominent yet among major corporations that have jumped on the Internet selling bandwagon only to discover that it’s moving much more slowly than they thought.

MarketplaceMCI, launched in April 1995, and 800-Music-Now, which came online seven months later, were touted as a way to let consumers--particularly those in rural areas that didn’t have many shopping options--get convenient access to the same wares available in big cities. MCI reportedly spent $10 million developing and marketing the service.

But even though nearly 40% of U.S. households have personal computers and Americans spend more than $70 billion ordering goods through the mail, getting consumers to switch to the online world has been an uphill battle.

“We are shifting our focus to investments that give us the biggest return,” said MCI spokeswoman Susan Landis, citing the company’s core long-distance telephone service and emerging Internet and local phone service offerings. “MCI wants to integrate only those services that provide the greatest benefits to our customers.”

Landis said about 20 MCI employees who worked in the telephone CD sales unit will be reassigned to other jobs and the merchants who participated in marketplaceMCI had been relocated to their own stand-alone Web sites.

Despite MCI’s setback, many experts still have high hopes for online electronic commerce.

Rival AT&T; and the Port Washington, N.Y.-based Internet research group PCmeter released studies this week, for instance, that found growing consumer interest in online shopping.

“There are right ways and wrong ways to go about doing this business,” said David Hughart, global marketing vice president for an AT&T; division that helps merchants set up retailing sites on the Internet.

“We don’t believe in the ‘Field of Dreams’ marketing school--if you build a [Web] site, they may indeed not come,” so you have to support the site with extensive marketing and advertising tie-ins, Hughart said.

The movement toward online shopping should get an additional boost next year when a consortium headed by Visa and MasterCard is expected to establish a standard method for credit card purchases on the Web. The consortium’s secure electronic transaction--already available from Netscape, Microsoft, IBM and other software sellers--will attract more consumers, industry analysts say.

Indeed, MCI’s cyberspace ventures may have been hurt by factors having nothing to do with consumers’ seeming aversion to electronic shopping, experts say.

Music sales overall have been poor this year, forcing a number of retailers--including Wherehouse Entertainment and Camelot Music--to declare bankruptcy.

And the most prized consumers--women--are still largely absent from cyberspace. Users of audience online services and the Internet are overwhelmingly male.

“Electronic commerce will take off; MCI just didn’t do a good job,” said Carl Lehmann, director of advanced information management strategies at the Meta Group consulting firm in Boston.

Times staff writer George White in Los Angeles contributed to this report.