how to sell shovels

Filed in archive Technology on December 15, 2003

Some years back the saying was "Instead of digging for gold, just sell the shovels". Now Loudeye wants to sell the shovels for online music stores. According to this article Loudeye will soon offer off-the-shelf digital music stores.

"The problem for companies that want to launch a digital media service with their own brand is that it's very expensive," said Loudeye Chief Executive Officer Jeff Cavins. "We'll charge them a fraction of the cost of what it would take to build it themselves."

However, the profit potential for these services remains dim. Apple has stated that it does not make money from iTunes, relying instead on the service's ability to drive demand for its iPod digital music player. Other industry executives have said that profits are possible, even if they are razor-thin.

Loudeye's Cavins said there is room for an intermediary in the business despite the tiny profit margins. His company is looking for customers who are interested in digital music distribution as a promotional tool for another product or service, rather than as a standalone business, he said."