BuyMusic.com to Sell Downloadable Songs to Windows Customers Beginning Today

Competing against online powerhouse Amazon.com Inc. has been brutal for Buy.com Inc., but it may seem easy compared with founder Scott Blum’s new endeavor: persuading computer users to pay for songs they can download for free.

Today, Blum is scheduled to launch BuyMusic.com, an online retailer offering 300,000 songs for 79 cents to $1.49 per track. A rough approximation of Apple Computer Inc.’s celebrated iTunes Music Store for Macintosh computer users, it will be the first of a wave of new sites selling downloadable songs to the far larger audience of music fans running Windows software from Microsoft Corp.

“We have an opportunity -- I don’t know how long it is -- to do a good job and win over consumers,” Blum said Monday, predicting that the entertainment industry’s crackdown on online piracy would push users of free networks such as Kazaa to paid sites such as his.

If first impressions are important, Buy.com wouldn’t be the model to follow.

The Aliso Viejo-based company’s strategy in the 1990s was to offer merchandise at cost, attract a large clientele and make money from advertising. But as Amazon.com and other online rivals kept attracting patrons, Buy.com wasn’t able to keep up with demand and experienced shipping and billing problems that drove customers away. (Blum took Buy.com private in 2001 and said it now turns a profit.)

Blum’s new venture won’t be able to duplicate the simplicity that some analysts say has been crucial to Apple’s success, in part because BuyMusic.com doesn’t have the technology or the licenses Apple does. Every song sold by the iTunes music store carries the same price and limits on copying, but tracks offered by BuyMusic.com will come with a range of prices and restrictions.

For example, the downloadable songs BuyMusic.com will offer from Universal Music Group can be burned onto CDs an unlimited number of times, but they can’t be moved directly to other computers.

By contrast, other record companies may limit the number of times a song can be burned onto a CD, though they may allow some songs to be transferred to one or two PCs.

Would-be competitors say legitimate online services have to try to duplicate the ease of use that music fans find on file-sharing networks and other sources of free music.

“I think it’s really important for consumers to get an easy, consistent and uncomplicated music offering, and they really shouldn’t be bogged down with complicated rules and restrictions,” said Ellie Hirschhorn, executive vice president and general manager of MusicNet, an online music distributor co-founded by RealNetworks Inc. and three major record firms.

Sources said Blum, unlike Apple’s Steve Jobs, didn’t press the record labels to relax their usage rules. Instead, according to one record label executive, Blum’s main concern was to get the service going as quickly as possible and beat rivals such as Amazon.com to market.

A number of Internet behemoths are expected to launch online music stores by the end of the year, including Yahoo Inc., AOL Time Warner Inc.’s America Online, Microsoft’s MSN and Real. So are several smaller players, such as San Diego-based MusicMatch Inc.

Hoping to press his advantage, Blum said he planned the largest television advertising barrage ever for an online music service: 2,700 commercials on national networks in the first two weeks.

Blum, who made more than $125 million selling part of his stake in Buy.com, declined to say how much the service cost to launch or market.

“If it’s a failure,” he said, “it would be deathly for myself because I’m betting so big on it.”

But if BuyMusic.com is a success, he plans to take the same approach to downloadable movies, he said.

Many users of file-sharing networks have said they copy music without paying for it because there’s no place for them to buy the individual songs they want. An array of online music subscription services and downloadable music stores have emerged over the last four years, but none of them had meaningful marketing before Apple launched its store in late April.

BuyMusic.com’s tracks will be delivered in Microsoft’s encrypted Windows Media format to deter piracy, rather than the easy-to-copy MP3 format found on file-sharing sites.