July 30, 2003

eBay Launches Music Downloading Auction Site

Overnight, Consumers Flock to Service in Record Numbers

San Jose, CA /DenounceNewswire/ -- 30 July 2003 -- In a stunning move that has other industry players immediately reconsidering their strategies, eBay, Inc. today announced the release of eBay Music, a new marketplace for music downloading. The service, which allows consumers to bid on rights to download any of over 18 million songs, has consumers cheering and competitors including Apple, eMusic, Real.com, and Roxio scratching their heads. The eBay Music site offers more songs than all of the other music download services combined.

"Today marks a turning point in the history of music," said Meg Whitman, eBay CEO. "With the launch of eBay Music, consumers finally have a way of acquiring all of the recorded music ever created, and artists now have a way to sell their creations directly to a global audience of over 65 million and counting."

After a year of secret development, eBay Music is launching as a new wave of post-Napster music services takes off. Earlier this year, Apple's iTunes Music Store grabbed the headlines with its slick, easy-to-use service offering some 300,000 songs for 99 cents each. Later this year, Roxio is launching a "legal" version of Napster, and MusicMatch has announced it too is launching a competitor music-downloading service. None offer anywhere near the number of songs of eBay, nor do they have the size and dominance of the web's largest marketplace.

About the eBay Music Service
eBay Music operates similarly to the rest of the eBay site, except consumers who "win" items can immediately download them rather than having to wait for a package to be shipped. Users can use the site by browsing artist names or genres, or by searching directly for an artist, song, album, or genre. Once an item is found, users can then place bids on the right to download a copy of the song.

Rather than charging a flat rate of 99 cents per download like Apple's iTunes Music Store, eBay Music is letting the market decide how to place a value on any artist's work. "We think the market is a lot smarter than the record industry, or even the artists," says Whitman. Within the eBay Music marketplace, songs by popular artists such as Eminem, Britney Spears, and Beyonce may actually be worth less than obscure independent artists who have yet to be commoditized.

A minimum bid is determined by the owner of the recording, in most but not all cases, a record company. The minimum bid may be 1 cent, 1 dollar, or 100 dollars. However, if the seller charges too high a price, no-one may buy it. Sellers may also use eBay's "Buy it Now" feature enabling buyers to skip the auction altogether and buy the item immediately. Unlike conventional eBay auctions, eBay Music auctions immediately start over as soon as anyone "wins", but the minimum bid price becomes the previous "win" price. Thus, prices may rise or fall as the market determines the true value of the song. "Songs that suck, even if performed by world-famous artists, are bound to stay cheap," says Whitman.

Potential Litigation from RIAA
Not surprisingly, the Recording Industry Assocation of America (RIAA) is up in arms over eBay's announcement. "They never consulted with us or got our permission," says Cary Sherman, the beleaguered president of RIAA. "What do they think they're doing, My.MP3.com all over again?"

Sherman vows to fight eBay's new venture with a slew of lawsuits.

"Bring 'em on," says Whitman, whose company has a market cap larger than all of the record companies combined plus General Motors. Posted by denounce on July 30, 2003 08:44 PM


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