2nd Annual Million-Dollar Ideas

Downloadable Music

We've all heard about the controversy surrounding Napster and MP3.com, but did you also know there are other companies doing the same type of thing-legally? Take MCY.com, a New York City company that calls itself the "anti-Napster." Unlike most downloadable music sites, MCY pays royalties to its contracted artists. "We are working with the artists, not against them," says Bernhard Fritsch, founder and CEO of MCY.com. "When we have a digital download from our site, the customer pays for it, and we distribute the money to rights holders."

Presently, visitors to MCY's site can download individual songs ranging from 79 cents to $1.99 per song. But that's not how the company makes its money. "We cannot make any money if we have standard products you can find at the record store or on DVD or CD," explains Fritsch. This is why MCY features exclusive online events from superstars like *N SYNC, the Backstreet Boys and Michael Jackson as well as top artists that are not in record stores. Ninety-nine percent of the site's files are exclusive property. And unlike MP3 files, MCY's product is encrypted, making it virtually impossible for users to download and share the files. Sorry, Napster fiends-you're out of luck.

"There is a trend toward companies like us," says Fritsch, whose combined sales MCY.com last year were $4.2 million. "Napster showed that at least 20 million people are interested in getting music online. But artists, record companies and producers aren't going to let the music be given away for free."

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This article was originally published in the January 2001 print edition of Entrepreneur with the headline: 2nd Annual Million-Dollar Ideas.

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