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News and Events
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September 28, 2004
Virgin Digital Online Music Store Is Open For Business!

Virgin.Digital.Logo.jpg

Virgin is all over the map. Yesterday morning, Sir Richard Branson introduced to the world that he was ready to make astronauts of us all by 2007.

Then, yesterday afternoon, Branson's LA California group, announced that all Americans who own a PC can now buy music online from a new service called Virgin Digital.

At ninety-cents a song, rivaling the likes of Apple's iTunes, Virgin Digital, the digital entertainment platform of the Virgin Group, is attempting to redefine the digital music market.

Yesterday, Virgin became the first major offline music retailer to enter the download market, in an effort to turn every PC into a jukebox.

"Virgin stands for innovation, fun, and an absolute dedication to customer value," said Branson in a statement.

"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."

The Virtual Virgin Megastore

His Virgin Digital Megastore offers an integrated 'Virtual Virgin Megastore' on any American PC (see below for requirements) with licenses for playing, burning to CDs, creating playlists, and downloading to over fifty portable-music devices.

The Virgin Digital Music Club

Consumers who prefer a greater level of music-access can pay $7.99 per month to have unlimited access to over 100,000 albums of on-demand, CD-quality music from all major and many indie labels.

Integrated into the Virgin Digital experience is their online radio service called Radio Free Virgin.

"Expert" Customer Service

Virgin's customer service includes:

'Ask the Expert,' a customer support and music discovery function available directly on the interface of the product which includes music recommendations and solving player-related technical issues.

'3-D Browsing,' an exclusive service that interconnects and cross links all relevant content including album credits and artist biographies. This allows customers to easily explore and experience the catalog for themselves in an intuitive, fun and personalized way. This is a unique service unlike other online music service providers.

Eddy Cue, the vice president of Apple in charge of its iTunes online music store, said Apple might consider a subscription service in the future, but it has no plans to do so now. "Customers are speaking loudly with their wallets," he boasts.

While this may be true, online companies that offer subscription services are far more profitable. Online service companies, after deducting certain expenses, split the fees 50-50 with the record labels. In contrast, an online store pays 65 or 70 cents to the record companies for each 99-cent track sold.

Zack Zalon, President of Virgin Digital, who deserves the title with his name alone, said, "We set huge goals with Virgin Digital -- bringing the excitement and customer-focused experience of a Virgin Megastore directly to the world of digital entertainment. And we nailed it."

Zalon added:

This is the most entertaining, powerful and intuitive way for dedicated music fans to find, listen, and manage their music collections. It's a true 360-degree world of music.

We wanted to look at feature sets that are actively represented when walking around a Virgin store," said Zalon. "Our rivals are technology companies developing music services. We are a music company developing technology. We look at things differently.

Leveraging The Brand & Other Services

To extend their music offering to current and new customers, Virgin intends to collaborate with other Virgin Group companies, such as their airline, record label and mobile phone service.

Branson's new reality show, "The Billionaire: Branson's Quest of the Best," debuting on News Corp. Ltd's Fox Network in November, will also help promote the music service.

Zalon's roll-out of the Virgin Digital Music service extends only to the U.S. today. Plans are currently underway to broaden this service outside America. However, no dates have been announced.

This past June, iTunes entered the British market for a song. Over 700,000 trackes were made available at 70p each. Apple's service, which extended to France and Germany on the same day, sold more than 800,000 tracks in its first week.

Hopefully lots of those were of the UK's Joss Stone and Jamie Cullum tunes!

Virgin Digital requires a computer running Windows 2000 or XP, Internet Explorer 5.5 and up, an Internet connection, a soundcard, ears, and a small talking loaf of cheese.

Too bad all our computers are Macs.

Like iTunes, Virgin's service requires a download, and the software also manages your music library.

Other competitors, in addition to Apple's iTunes, include:

Coca-Cola's MyCokeMusic.com
MSN Music at Music.MSN.com
RealNetworks' Listen.com's Rhapsody
Roxio's Napster
Sony's Connect
Time Warner's America Online
Wal-Mart
Yahoo!'s Musicmatch.com

Currently, iTunes holds a solid 70 percent share of the market. Sources say Apple is selling around 15 million songs per month, but only making a nickel on each song. (From each 99 cent sale, 62 cents or more goes to the copyright holder, 4 cents to Apple and about 8 cents to the music publishers.)

In one calendar year since the service launched last April, Apple sold 70 million tracks, 30 million shy of its goal. (Now, if they had just launched their affiliate program a little earlier...)

The company reached its goal of over 100,000 million tracks in July. A twenty year-old college student from Kansas bought # 100 million. As a result of buying Somersault (a Dangermouse remix), Kevin Britten received a 17-inch PowerBook notebook computer, a 40-gigabyte iPod, a gift certificate for 10,000 iTunes songs, and a personal call of congratulations from Steve Jobs, Apple's CEO and co-founder.

What do you suppose Sir Richard Branson will do when VD reaches that mark?

Looking to The Future

If I were one of Branson's astronauts heading to space today, I'd be able to take one million songs with me.

By 2007, when the first Virgin Galactic Airways' VSS Enterprise is ready to take off, how many songs do you suppose will be part of Virgin Digital's repertoire? Jupiter Research estimates that in three years online music will account for 33% of the music industry's sales.

Look out Steve; here comes Richard!

Virgin.Digital.Interface.jpg

For further details on Branson's latest venture, go directly to:

VirginDigital.com

Here's to healthy, adventuresome, soulful, digital download do-ray-me living!

~ Jennifer King


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