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Summary:

Users of IMVU, the popular web-based virtual chat room network profiled on GigaOM last June, can purchase songs from a catalog of 1 million tracks, either as a stream to be played within IMVU or as DRM-free MP3s they can play anywhere.

music3We’ve already seen video games like Guitar Hero and Rock Band dramatically change the way music is sold and marketed. Will virtual worlds bring about even more transformation? The four major record labels are gambling on just that with an online music store on IMVU, which comes out of beta today. Users of the extremely popular web-based virtual chat room network (profiled on GigaOM last June) can purchase songs from a catalog of 1 million tracks (reg. req.), either as a stream played within IMVU or as DRM-free MP3s they can play anywhere.

Other virtual worlds have music-streaming features, of course, but here’s the cool thing about this one: You buy music with IMVU’s virtual currency, which the company sells to users at 1,000 credits per $1. (Users can buy and sell IMVU credits on third party sites, too, often at better exchange rates.) IMVU also has a large marketplace for user-generated content — mainly clothes and other accessories for avatars — and these items are also bought and sold for credits. So, not only can IMVU users legally purchase major label music with virtual currency, they can buy more songs by creating and selling virtual content, too.

In a call last week, IMVU CEO Cary Rosenzweig told me that the music store instantly became one of the site’s most popular features. He believes it’s the next step after what he calls Music 1.0, in which music is simply bought and downloaded off the Internet. This, he thinks, is part of the Music 2.0 era, where songs are enjoyed together, in a shared online experience, be it on social networks like MySpace, or in virtual worlds.

Along with tunes from EMI, Sony BMG, Warner and Universal, IMVU is also selling tracks from independent distributors and encouraging IMVU users to sell their own music through those channels. The company says Google Analytics tracks 10 million monthly unique vistors to IMVU, a large potential market for both big label artists and up-and-coming, homegrown IMVU stars. Guitar Hero and Rock Band renewed new consumer interest in the majors’ back catalog, a phenomenon the record industry is actively capitalizing on. IMVU’s service will test the appeal of virtual worlds as another alternative distribution channel.

“I expect the music industry is going to be watching this carefully,” Rosenzweig said. So will I.

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  1. I know this is semi-old news, but I wanted to throw in some of my 2 cents about the idea here. I think it’s great that IMVU is looking at other monetization ideas. Offering MP3 downloads for use in and outside of IMVU for virtual currency is a great idea. I love that you can trade USD for Credits for MP3. It’s just great to be able to do that sort of thing, especially if you are a teen that has a certain amount of money, and can only buy a small amount of online goods each month. What if they buy $10 worth of credits, and have $0 left over, but decide they really want to download a new hot song. Instead of stealing it, they can take remaining credits they still have and grab the tune – and it’s still legal. Helps avoid temptation. =) Anyway, that’s all for now.

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