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Last Updated: Friday, 28 January 2005, 10:48 GMT
Stelios hails download 'shake-up'
Stelios Haji-Ioannou
Haji-Ioannou established his empire on competitive pricing
Stelios Haji-Ioannou, the founder of budget airline Easyjet, has said he believes the music industry will "go through a shake-up" as cheaper legal download sites become available.

Mr Haji-Ioannou, who has built his company EasyGroup by undercutting rival services, has created Easymusic to compete with the likes of Napster and Apple's iTunes.

The site's major selling point is the price - some tracks will sell for 25p - as well as offering the chance for new groups to promote their music free of charge, on the condition it can also be downloaded free.

"I think the digital world is going to eventually take over," Mr Haji-Ioannou told BBC World Service's The Music Biz programme.

"Look what's happening in America, with iTunes and everything else. It has to be more efficient than actually putting the music onto little silver discs, then putting them in a box, shrink-wrapping them and then putting them in a bigger box, then a truck, and sending that truck to a shop."

Price war

The 25p price compares to typcial costs of between 79p and 99p on most UK legal download sites.

However Tom Dunmore, a writer for download music magazine Rip And Burn, pointed out that more popular songs will sell for the same price or even higher than Easymusic's rivals.

CD
I don't see how the artists really benefit by having CDs in shrink-wrapped boxes. It really doesn't do anything for them
Stelios Haji-Ionnou
There have been fears raised within the music business that Easymusic may trigger a price war that could damage and even destroy the fledgling download industry.

But Mr Haji-Ioannou claimed what he was doing was "good for every industry."

"There were people who said when I started Easyjet that 29 would ruin the airline industry," he argued.

"Far from it - it has made some companies less profitable, but it has forced them to compete, and therefore become leaner and more competitive."

He also rejected claims that low download prices would take money away from artists and artistic development.

"Nobody wants to under-reward talent," he said.

"But I don't see how the artists really benefit by having CDs in shrink-wrapped boxes. It really doesn't do anything for them."

He believes retailing online is the "most efficient way" of getting music to the listener.

"Hopefully there will be enough money left in the kitty to pay the record label for selecting the talent, and the talent itself."

However, Mr Dunmore said that Easymusic could find themselves struggling, caught between established music download sites and illegal downloading.

"Clearly what services like Easymusic have got to do is attract people who are already buying CDs, and used to paying out money, but also attract people who are used to downloading things for free," he said.

"There's this massive culture that has developed of getting songs for free. So somehow you have to lure those people in."

'Goldrush for lemmings'

Mr Dunmore also argued that what was actually on offer for 25p was "really very limited."

iPod
Apple's iTunes has a low profit margin, but also promotes the iPod
"Once you get beyond them, you start paying 79p or 1," he added.

"Obviously that's a significant increase - and also, in some cases, more than the competition."

He added that the download market had been termed "a goldrush for lemmings," and that it was difficult to see where the profit potential lay.

"It's been estimated that with Apple's iTunes, of the 99 cents only four cents go to Apple - the rest to the record company," he pointed out.

"We're really talking about very small margins here, and the only way that Apple can really get away with it is that fact that iTunes music store promotes their hardware, the iPod, where they do actually make a decent profit.

"Competitors - and Easymusic is one of those - do not have the hardware side. So they have to make money from the downloads."

"We're seeing a lot of people entering the market, but we might well see quite a few of them leaving the market within a couple of years."


SEE ALSO:
Stelios enters online music fray
16 Sep 04 |  Business
Easybus service launched for 1
13 Sep 04 |  Beds/Bucks/Herts
Stelios set to launch Easymobile
06 Aug 04 |  Business
Stelios mulls buying Easyjet back
05 Jul 04 |  Business


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