Published July 2005

NetMusic:
Digital media company extends reach
with recent merger, acquisition

By Kimberly Hilden
SCBJ Assistant Editor

For the past two years, NetMusic Entertainment Corp. has quietly transformed itself from an online directory of Internet music sites into a worldwide digital media company, complete with video-on-demand service and two online providers of digital music.

Snohomish County Business Journal/ KIMBERLY HILDEN In the past year, NetMusic Entertainment Corp. has experienced "meteoric growth, and it keeps going," said chief executive Glen Starchman, sitting in front of a collection of album covers adorning the walls of his Edmonds office.

Now, with plans under way for a next-generation jukebox as well as the addition of hundreds of thousands of record tracks to its inventory, the Edmonds-based company is ready to make some noise.

"We've watched and observed and planned what we'll do. ... In January, we made a concerted effort to be aggressive in explaining where we're going," said Glen Starchman, who joined NetMusic as its chief executive in August 2003.

"We're all about the ubiquity of entertainment," said Starchman, sitting in his office at NetMusic's headquarters, located inside the Old Milltown Antique Mall.

A number of business deals in late 2004 helped move NetMusic in that direction, including the October merger with New Jersey-based Ultimate Jukebox Inc., which had been working to create digital jukeboxes with the ability to play from a collection of thousands of songs.

"Digital Jukebox gives us a way to promote content of ours and others. It opens up a whole new realm. We're extraordinarily close to (launching it)," Starchman said, adding that the jukebox will come in two models, one designed like a kiosk and another designed as a touch screen.

"We're talking to a major manufacturer that introduced an LCD screen that is compelling and would allow us to go into locations that may not (yet) have a jukebox," Starchman said, noting that with the merger, NetMusic became a publicly traded company on the Over-the-Counter market.

Following the Ultimate Jukebox deal, NetMusic in December acquired Audio Lunchbox, a Los Angeles-based online music provider focused on independent music.

Those services complement NetMusic's own online music service, at www.netmusic.com, which has about 1 million music tracks available for customer download. That number could double by next spring, Starchman said, as the company has been negotiating with major labels to acquire rights to their music catalogs.

And who are the people paying to download music at NetMusic? Informed consumers who know what they want in their music library, Starchman said.

"Customers seem to be a bit older than what you'd assume; they're in their late 20s to 30s," he said. "Thirty percent of our consumers are overseas, and many of our consumers come from rural areas."

As for the company's future, Starchman said he sees promise in foreign markets such as the Middle East and Southeast Asia, places that might present a risk for organizations whose larger size would make it difficult to change course once a sizable investment of time and resources had been made.

In contrast, NetMusic, with its staff of 12, is an "extremely lean organization," just the right size for trying new ventures — and capitalizing on them.

"There's always a niche market for people like us," he said, "and that niche is getting larger and larger."

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