Sounds goes it alone on the web

By KARYN SCHERER

New Zealand's largest music retailer, Sounds, has shunned overtures from e-tailer FlyingPig to launch a rival internet business.

The chain, which has nearly 50 stores nationwide under two brands, Sounds and Tower Music, has formed a joint venture with Wellington-based new media company Hyperactive to launch a site it claims is one of the first true "clicks and mortar" businesses in the country.

The buzzword refers to existing "bricks and mortar" businesses that integrate their operations with an internet business.

While Sounds concedes it is likely to cannibalise some of its own sales, the company claims its plans will help develop the $160 million music market in this country.

Its aim is to capture half of all internet CD sales here within the next four years - a market it believes will be worth around $28 million by 2003.

The new web site, soundsnz.co.nz, is due to go live today and will initially offer 20,000 titles.

However, the company has ambitious plans for stage two of the project. It is looking for a distribution partner which will enable it to offer more than 200,000 titles, and is also planning an eight-channel internet radio station, a free 60-page magazine and digital downloading capability.

Although the "radio station" will initially offer continuous music, it plans eventually to employ DJs and incorporate advertising. The additional services are expected to be available by March next year.

The launch comes less than a fortnight after the launch of FlyingPig (www.flyingpig.co.nz)- a rival internet business that has links with two of our biggest retailers, Whitcoulls and the Pacific Retail Group.

At this stage, FlyingPig is offering books, videos, software and stationery, but has plans to expand into music, computers, electronics and appliances.

The managing director of Sounds, Sean Coleman, said he had decided against joining the Eric Watson-backed company, as he was concerned the Sounds brand would be overshadowed by FlyingPig.

"It's no secret our long-term aim is to float on the stock market so to give our brand away on something as important as an online business would harm that flotation dramatically."

The new site is also likely to offer strong competition to Christchurch-based e-tailer CDStar, which was launched in March.

CDStar (www.cdstar.com) recently raised $1 million through a public share offer, has already expanded into Australia and plans to become a global brand.