MP3.COM SOUNDS OFF IN GROCERY CONNECTIONS

RANDY WEDDINGTON

EASTON, Pa. -- Laneco Supermarkets here and J.H. Harvey Co., Nashville, Ga., are now on-line with a new retail music and advertising service from Internet music service provider MP3.com, San Diego, Calif.

The service delivers in-store (and on-phone) audio combining digital music with advertising/communication messages. Its music is drawn from MP3.com's library of more than 600,000 songs and audio files, supplied by more than 100,000 artists and record labels. Its messaging is provided by Adergy, LLC, Gulf Breeze, Fla., which agreed in September to become the first value-added reseller (VAR) for MP3.com's service.

Harveys, which did not return SN calls for comment by presstime, began the service in September, according to the supplier, since then installing it chainwide in its 45 supermarkets in Georgia and Florida. "It comes as no surprise that [Harveys] is the first grocery chain to utilize the revolutionary MP3.com/Adergy retail music and messaging service," said Adergy spokesperson John Greenfield in a company release. "Harveys has long been a pioneer in utilizing downloaded, satellite-delivered, location-specific audio to better target their in-store messaging efforts."

A general merchandise manager at the Laneco SuperCenter, Allentown, Pa., confirmed the new system's operation. "The music has been much better than it was," said Deb Smith.

The program's technological advances bring new benefits to the supermarket trade. "By implementing our revolutionary service, Harveys and Laneco gain incredible distribution flexibility and control over the music and advertising messaging that reaches their consumers," said MP3.com's Bob Simril, vice president of retail music services, in a statement.

Controlling the system is the MP3 Media Server 1.0, a Linux-based device released by MP3.com in June. It provides the link to Web-based management tools. "Retail subscribers will love the low-touch simplicity and reliability of the player," said Simril. "After simple installation, they manage the music selection, shuffle play, and ad management features from their private, password-protected homepage."

Retailers can add their own or vendor-produced ads to their playlists by uploading them as MP3-format files to the MP3.com Web site.

This opens up a new grocery revenue stream. "Because custom advertisements can be added to programming," said Simril, "a business can actually make money with this music model."

The program's costs are likewise advantageous. "The savings are substantial," Simril said.

"We estimate that a typical retail chain with 100 stores will pay up to $300,000 for music services over a traditional five-year contract," said MP3.com Chairman and CEO Michael Robertson. "With our music delivery solution, we believe we can save operators up to 50% (over costs from competitive services), which means that if you have 100 stores, we could save you up to $150,000 over the course of five years."

MP3.com organizes its in-store music into libraries, each of which is "a unique soundtrack for the world inside your business," according to its Web site. These collections include The Marketplace (mainstream), Adrenaline (younger audiences), Heartland (country), Modern Sophisticate, Summer Passport, New Horizons and Cool Yule. Listed genres are adult contemporary, alternative, country, electronic, jazz, classical, urban, world beat and hip hop.

One possible disadvantage to this mix is a relative scarcity of well-known performers. Unlike Napster.com, its main rival in Internet music transmissions to consumers, MP3.com has many artists who record and publish their own material, airing it on the Web site in hope of selling their "homemade" CDs.

In a Q&A session for potential customers on its retail Web site, MP3.com is coy about this situation. After direct yes-or-no responses to easy questions, the site poses a tougher one -- "Can I play music from Top 40 artists?" -- and answers it with a song-and-dance routine: "MP3.com's Retail Music Strategies include the music of thousands of global digital artists and are constantly growing. Artists opt-in to the program and may or may not be familiar to you or your customers."

This doesn't mean that unfamiliarity breeds contempt, however. There is no shortage of talent among the site's many lesser-known artists.

For MP3.com this service represents an entry into brick-and-mortar business that may prove less volatile than its on-line operations. Like Napster, MP3.com has been beset this year by legal problems. In January the Recording Industry Association of America filed suit against the company, claiming that it didn't get industry permission before creating its music database. A settlement agreement ended disputes with most major recording companies, but a copyright infringement suit by Universal Music Group continues.