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Ops Get Ready to Spin T-Commerce Music Net

DirecTV Inc. and several MSOs plan to launch a new service that will allow subscribers with digital music channels to buy CDs from the artists they listen to. The product, supplied by Horsham, Pa.-based Music Choice, is one of the biggest attempts yet at television commerce.

Music Choice, which currently offers 45 digital music channels to about 20 million U.S. cable and satellite subscribers, plans to add graphics that display artist album covers to blank screens which currently list only the name of the artist and song that is playing. It will also allow subscribers to purchase the CD of the band they're listening to with the click of a remote control, and split the revenue from CD sales with its cable and satellite affiliates, Music Choice CEO Dave Del Beccaro said.

The interactive service is backed by Adelphia Communications Corp., AT&T Broadband, Comcast Corp., Cox Communications Inc., Time Warner Cable, Motorola Corp, Microsoft Corp., Sony Corp, Warner Music Group and EMI Music.

DirecTV will be the first company to launch the interactive version of Music Choice, debuting the service sometime within the next two weeks, Del Beccaro said last Wednesday. Cablevision Systems Corp. will also launch the interactive product, but its subscribers won't be able to purchase CDs until the middle of next year since the MSO doesn't yet have a middleware system in place that can enable transactions, he said.

Charter Communications Inc. and some other MSOs are expected to launch the t-commerce service in December or early next year.

Charter spokesman Andy Morgan said the MSO's current carriage deal with Music Choice includes terms for the t-commerce product. The company hopes to launch it early next year, he added.

Any cable operator that has digital set-tops installed with interactive middleware software will be able to offer the service. While U.S. operators have been aggressive in deploying digital set-tops, few have deployed middleware from companies like Liberate Technologies Inc. or Microsoft that would enable ITV services.

In June, when AT&T shifted the focus of its ITV strategy from advanced set-tops to deploying ITV services on the Motorola DCT-2000 set-tops it already had in the field, the company said it would add middleware to the set-tops. But the company still hasn't deployed middleware that would enable ITV.

Del Beccaro said the average Music Choice subscriber listens to digital music channels for 13.9 hours each week, but that the company hasn't projected how much revenue it will generate through CD sales.

"It's hard to tell. This is something people have never done before — nobody on a nationwide scale has given people the ability to buy products at the push of a button," Del Beccaro said.

Sacramento-based music distributor Valley Media will supply the CDs, and ship them directly to subscribers, he said.

Most of the CDs will be priced at $17, plus shipping and handling fees, which will bring the average cost to about $21 per CD, Del Beccaro said. Retail outlets charge less for CDs, but he said the company expects subscribers will be willing to pay more since most sales will be impulse buys.

Del Beccaro declined to say how much of a profit the company will make from each sale, but he said it's a small margin, adding that Music Choice and its affiliates will split the net profit "about 50-50."

DirecTV spokesman Bob Marsocci wouldn't discuss specifics involving the interactive Music Choice product, but he confirmed that the companies are working on something new.

"We have been exploring new features, new services for their programming, and an announcement is forthcoming," Marsocci said.

The DirecTV service will be powered by Wink Communications Inc.'s software, Del Beccaro said. Cablevision officials confirmed they're working with Music Choice, which was added as a part of its new iO digital platform, but didn't say when they'll launch the t-commerce product.

"Cablevision designed the iO platform to handle a growing number of digital services, including a variety of t-commerce services to come," spokesman Keith Cocozza said.

Time Warner spokesman Mike Luftman said the MSO is conducting some technical tests on the new Music Choice service. "We have to get through that, and then we'll have to see," he said when asked if the company might add the interactive Music Choice product to its systems.

AT&T Broadband is still testing middleware that would enable the interactive Music Choice service and other ITV services, spokeswoman Tracy Baumgartner said.

"That kind of functionality is where interactive TV will eventually be going, which is enabling the viewer to order and interact with the television in a way which gives them what they want," Baumgartner said.

Comcast spokeswoman Jenni Moyer said the MSO is evaluating a number of ITV applications, including Music Choice. "Look for it soon," she added.