In an attempt to maintain market share, six major high-street music retailers have teamed up to develop their own online music services.
The Echo consortium, due to be announced today, consists of US (and international) firms Best Buy, Hastings Entertainment, Tower Records, Virgin Entertainment, Wherehouse Entertainment and Trans World Entertainment.
"We are approaching the labels with the same goal of making digital-music services work in the mass market," said Echo CEO Dan Hart.
The consortium purchased Echo at its formation. It adopted Echo's name, domain and intellectual property so its members could use its technology to create their own online music services.
The retailers hope to leverage their prowess in the offline world to offer new and unique music services to their customers, Hart said. Ideas include giving clients free music downloads when they purchase a CD, or having in-store kiosks that store customers' music preferences based on their online activity, and offer recommendations and discounts.
"We are in the position to bundle values," Hart said.
While the group has yet to approach the labels on licensing agreements, Hart said that he did not believe the negotiations would be too difficult, given that the record companies and the retailers have the same goals of offering customers online services that do not eat into their core offline distribution channels.
"This is the second wave of digital music," Hart said, "this group of people is not going in with starry eyes."
The retailers hope to launch music download, streaming and radio services, among others, using the Echo technology. Retailers could chose to offer private label or co-branded services and each retailer would set their own prices.
All six retailers have an equal investment in the consortium.