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France's MPO Still Believes in Custom CDs
MPO, a French record and CD manufacturer founded in 1957, on Wednesday announced a program aimed at enabling portals and e-commerce sites to offer personalized CDs. The idea is that Internet users choose tracks online, which are then compiled and made into a CD by MPO.

Though other services offering personalized CDs, such as MusicMaker and CustomDisc, have already proven unsuccessful in the U.S., MPO believes its business-to-business approach -- and longstanding relationships with the major record labels -- will enable it to make the service profitable in three years. The company is already close to signing deals with BMG, Warner and EMI to distribute some of their titles via its CD-on-demand service, and it is talking with Sony and Universal, said Philippe Thorel, managing director of MPO Online.

A deal with the subscription streaming service MusicNet could also be on the cards, as one of its backers, RealNetworks, has already lent its technology to the MPO offer. The technology would enable users to listen to tracks before they add them to their compilations. "MPO has a relationship with the majors that could serve us [MusicNet] well in Europe," said Gilles Brabant, director for southern Europe for RealNetworks. While MusicNet so far has announced no plans to offer personalized CDs alongside its streaming services, it is a possibility, he said.

MPO's goal is to offer its custom-CD services to portals and e-commerce sites. It doesn't plan to operate its own consumer site. "We want to stay within our longtime profession of wholesale distribution," said MPO president Loc de Poix. MPO works with record labels and film companies to produce and distribute records, CDs and DVDs.

On Wednesday, MPO announced a deal with Wanadoo's online book and CD retailer Alapage.com. Later this month, Alapage will launch a promotion enabling users to create their own CDs from a list of around 100 "hits," said Patrice Loze, managing director of Alapage. The service will likely be extended in the future to include other genres of music, he said.

One of the reasons sites such as MusicMaker didn't catch on in the U.S. is that they offered outdated songs that few people were interested in purchasing. MusicMaker managed to attract the support of, and even investments from, major labels, but these labels refused to release top hits for compilation sales. A glance at the tunes available on the Alapage service (including oldies such as "YMCA" and "The Macarena") seems to confirm this: Record companies won't release the rights to songs for compilations until they've milked all opportunities to sell them as singles and on albums.

"Most titles won't be available until six months to a year after they come out as singles," Thorel acknowledged. But he says MPO's relatively small investment of $1.9 million into developing the technology behind the service, as well as its ability to fulfill orders from its eight CD manufacturing plants, will enable it to sell 3 million made-to-order CDs a year by 2003. Thorel said by promoting the custom CDs as an added-value service to sites offering CD sales and digital music downloads, the company should be able to carve out a profitable niche for itself. "We are not trying to be a portal and a CD manufacturer at the same time," which was MusicMaker's mistake, he said.

Still, the path followed by MusicMaker is one MPO would be wise to investigate. In January the company declared bankruptcy after realizing that many users preferred to download music directly from services such as Napster, either storing songs on their hard drives or burning them into recordable CDs.

And it's not just free downloadable music that makes the customizable CD market a difficult one to crack. As early as September 1998, a custom-CD startup called MY-CD closed up shop after only three months -- because record labels refused to hand over their top hits.




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