Faucet Opened: Liquid Audio Adds New Distribution, Releases

Capitalizing on an industry shift toward digital music distribution, Internet digital music software provider, Liquid Audio, Inc. (Nasdaq: LQID), said Friday that it has added new releases from virtually every large record label and also expanded its distribution network.

The Redwood City, California-based company said it has significantly expanded the reach of its distribution network, which consists of Yahoo!, CDNow, barnesandnoble.com, Amazon.com and nearly 200 retail music Web sites.

Over the last month, Liquid Audio said it has added new releases from Atlantic, Arista, Bad Boy, Capitol, Dreamworks, Elektra, MCA, Polydor/Universal, RCA, Windham Hill, Warner Brothers and a number of other major record labels.

The releases include music from notables like David Bowie, Jewel, Alison Kraus, Dave Matthews, Emmylou Harris and Linda Ronstadt and Los Lobos, to name a few.

In the Digital Distribution Vanguard

Liquid Audio is a provider of software and services for the digital delivery of music over the Internet. Founded in 1996 by industry veterans and recording engineers, the company’s products are based on an open architecture that supports virtually all digital music formats, including MP3 and Dolby AC3.

Its free downloadable Liquid Player software allows the company to secure music from over 1,300 musicians on nearly 300 labels. The company claims that its products make it compliant with the Secure Digital Music Initiative, which was recently signed by a number of large labels and some manufacturers of digital compression devices.

“Liquid Audio’s turn-key distribution and e-commerce services are enabling scores of brick-and-mortar and Internet retailers to offer major label and independent music in their online stores,” said Liquid Audio VP, Dick Wingate. “These new music sales and promotions demonstrate that Liquid Audio is building the label and retail relationships it needs to succeed as an Internet music distributor.”

Converting Tech to Profit

Like Mp3.com and other digital music companies, Liquid Audio has yet to convert its technological advances to profit. It reported losses of $6.1 million (US$) in the second quarter of this year, on revenues of $745,000.

However, the company is hardly cash-strapped. It completed a $72 million IPO in July. Liquid Audio said some of the money is earmarked for new product development and Internet services and marketing.

Among the original backers of the company are Media One, the Metromedia Company, Intel and Vulcan Ventures, owned by Microsoft co-founder, Paul Allen. Amazon.com reportedly has options to take nearly a 10 percent stake in the company as well.

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