Digital audio service expands

Posted 8:23AM on Tuesday 12th March 2002 ( 23 years ago )

PHILADELPHIA - It was tough to sell people on paying $10 a month to add music channels to their cable television a decade ago, but a suburban Philadelphia digital audio company has since spread the business nationally by hitching a no-extra-charge ride on new digital cable and satellite TV services. Started in 1990 with 19 channels after test marketing by General Instrument Corp., Music Choice took until October 1998 to reach 5 million households. Then it jumped to 10 million in 1999 and 22 million this year as cable television, entertainment and other companies joined in as partners. Music Choice is now a partnership of Microsoft, Motorola, cable operators including AT&T Broadband, Time Warner Cable, Comcast, Adelphia and Cox, and subsidiaries of Sony, Warner Music Group and EMI Music. It offers more than 50 channels and reaches nearly one in five American homes, about 85 percent of the market. ``In 4 1/2 to 5 years, we'll be in half the homes in America,'' said Dave Del Beccaro, president and chief executive officer of the company based in Horsham, 15 miles north of Philadelphia. Digital audio channels still play a ``microscopic'' role in the business of partners such as Microsoft or AT&T Broadband, or, for that matter, in customers' overall listening habits, said Tom Wolzein, media analyst with Sanford C. Bernstein & Co. ``It's a nice service that's added on for people,'' Wolzein said. And the music channels boost the total number of channels cable or satellite TV operators can boast of, he noted. New developments will mean a bigger financial role and a bigger part in customers' lives, however, Del Beccaro predicted. For example, digital cable customers soon will be able to purchase CDs directly from their television screens on Music Choice channels, ``a new way of selling and promoting music,'' Del Beccaro said. The company announced an agreement with Alliance Entertainment Corp. in Coral Springs, Fla., in February to fill its orders and distribute the CDs. Music Choice channels on Direct TV satellite television already have interactive screens that display the album cover, song and artist information on the music that is playing, and let viewers order the CD with a click of the remote control. All Music Choice customers will get that interactive capability starting April 10. Future plans include enabling customers to mix their own channels, said Del Beccaro, who held marketing and financial posts at Ford Motor Co. and General Instrument and was vice president of new business development in General Instrument's Communications Division when he founded Music Choice. Eventually, customers will be able to download channels for listening in the car without the monthly fee for satellite radio, he said. Channels include several different mixes of rock, country, rhythm and blues, jazz, classical, Latin and other kinds of music, 24 hours a day. In a study by the Frank N. Magid Associates television and entertainment consulting firm, music fans said they listened to Music Choice more than the radio while at home, citing the variety of music and lack of ads. ``There are no commercials, no DJs, just wall-to-wall music, whatever your favorite music is,'' Del Beccaro said. ``It's just 100 percent music,'' said Craig Snyder, of Philadelphia, who said he always listens to the music channels instead of radio at his home. ``Depending on what kind of music I want, I can put that channel on and that's all they will play, they won't bounce around.'' The eventual ability to download the channels to the car also would be ``good stuff,'' said Snyder, a 35-year-old employee of a financial services company who travels about two days a week on his job. Rather than advertising, Music Choice gets most of its revenue from license fees from the cable and satellite companies. The private company doesn't reveal revenues, but has been a fast-growing profit-maker rather than loser, Del Beccaro said. ``Last year we grew by 6.7 million homes,'' he said. ``When we get in, people listen to us tremendously, an average of 14 hours a week.'' The company has added concert shows and shows with performer interviews and behind-the-scenes coverage to its offerings. The next step in a year or two will be giving customers the ability to design their own mix of music, with focus group tests planned next month. ``You'd be able to mix different channels and decide what kind of music you want to emphasize. If you like classical, you could emphasize piano concertos, or you could eliminate piano concertos. If you like metal music, you could emphasize or eliminate Thrash. If you wanted to mix classical and jazz, and you wanted one out of three pieces to be a jazz piece, you could design a channel like that,'' Del Beccaro said. ``It's personalized music,'' he said.

http://accesswdun.com/article/2002/3/197584