Europe's Four Little MP3s

SAN FRANCISCO (08/25/2000) - In 1997, Michael Roberston purchased MP3.com Inc. from a gentleman with the initials MP, in what may go down in dot-com history as the greatest speculative domain buy of all time. But four businessmen are showing that the histories of European country domains -.de, .fr, .it. and .es - are still being written.

Those four businessmen, owners of mp3.de, mp3.it, mp3.fr and mp3.es, operate music sites at those addresses and have no relationship whatsoever with $500 million-market-cap MP3.com.

As of this week, however, they have a relationship with one another. The four have announced the formation of the "MP3 European Alliance," or MP3 EU, and registered the domain mp3eu.com, which they plan to use as a pan-European music catalog and search engine. And while they aren't ruling out a partnership with Michael Robertson, each seems to feel that, at least in Europe, they can do him one better.

"We expect to be the biggest community of mp3 in the world, with a customer base of 400 million users," says MP3.fr General Manager Gilles Babinet. "Since we have every mp3 name in Europe, we are stronger in terms of skills than Robertson."

Knut Langen, marketing director for MP3.de, pointed out that the four fledgling sites have at least one competitive advantage over MP3.com. "We are not in any lawsuits with any major companies," says Langen, alluding to MP3.com's legal fight with the major record labels. "We are a little more conservative."

On the heels of their announcement, the four European MP3 CEOs were hard at work during the sacred month of August at their respective offices in Paris, Madrid, Naples and the Rheinland of Germany.

A spokesman for MP3.com said in an interview that MP3.com Chairman Michael Robertson and President Robin Richards would be unable to comment, because they are on vacation.

All four members of MP3 Alliance Europe say they've had no contact with MP3.com, but Thierry Scelles, general manager of Spain's MP3.es, expects that Michael Robertson will eventually come calling.

"I think they will try to do a deal one day," Scelles says. "It's going to be difficult because there are a lot of mp3 domains that are not MP3.com."

For example, MP3.com has no claim on MP3.com.ar (Argentina), MP3.co.mx (Mexico), MP3.com.au (Australia) or MP3.co.uk (Britain).

The Australian and British sites, which are owned by Sprint Corp. Australia and backed by Yahoo Inc., also borrow MP3.com's slogan, "Music Service Provider."

The MP3.com in San Diego holds U.S. trademarks on some of its more controversial services, My.MP3.com, Beam-It and Instant Listening.

According to Searchterms.com, "MP3" remains the second-most-searched term on the Internet, one spot behind "travel," and one ahead of "sex," making MP3.-anything valuable real estate.

Jupiter Communications Inc. expects that by 2005, 40 million Internet users will spend US$1 billion on music subscriptions and $500 million on a la carte music downloads worldwide. By the same year, Jupiter expects 25 percent of U.S. music sales to occur via the Internet. While Europe lags behind in the adoption of e-commerce, owners of the European MP3s believe a market will emerge here, and they are positioning themselves to seize it.

The biggest of Europe's four MP3s is in France. Babinet has raised 12 million francs, and expects his 25-employee operation to grow to 60 by November.

Babinet's team is working on a subscription-based service that would allow anyone to pay a monthly fee to download all they want. He also has a deal with France Telecom SA to build a WAP portal for downloading music to mobile phones.

Fabrizio Morrone, owner of MP3.it, trademarked the domain in Italy and runs an 8-employee company in Naples.

"We have some investors," he says. "Now we are growing really fast. I am the brain. I am the heart of this operation. I have to be fast. Investors could create more problems than help."

Aside from links to each other's sites, the first tangible result of the alliance will be a "European Grammy Awards" for the best MP3.

"Europe is different than the States," explains Langen. "We have different tastes and cultures."

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