Will Loudeye Be Loud Enough?

jeffcavins.jpgLoudeye‘s ambitions are to be admired, especially after it came out of whole storage and encoding morass, a field littered with dead companies. This is a company which less than a year ago was in danger of being delisted from Nasdaq SmallCap market. But since former Sony Broadcast executive Jeff Cavins came in as CEO, the company has made a turnaround, and has been trying to brand itself as the digital media company, providing infrastructure to the entertainment community. And that footprint has just gone international, with Loudeye’s rather surprising acquisition of OD2, Europe’s largest digital music provider.

I had quick chat with Jeff on the company’s rational behind the deal, and the future going ahead. (It happened again: my dictaphone malfunctioned….damn. So I’m paraphrasing, and some of the details are lost…).

The rationale behind the acquisition, as Jeff explained to me, is to scale the international economies of scale for its clients in the entertainment industry. Clearly, Loudeye has the infrastructure..OD2 brings in the complex right and relationships across Europe, and the already existing relationships.

Speaking of digital media, for now, it means digital music for Loudeye. But it would be any form of entertainment content delivered over IP, wireless ans set-top boxes, in the near future: games, videos and movies. The idea is to remain behind the scenes of the digital media an entertainment world, though as history would testify, that has been a difficult discipline to maintain for a lot of companies.

And then, there’s Microsoft. Both Loudeye and OD2 have close relationships with the software giant, and Jeff said that MSFT was one of the catalyst pushing this deal. The upcoming Janus DRM from Microsoft, which will enable digital music services to offer portable subscriptions, is a big thing for Loudeye, and it hopes to capitalize on that.

On how the company will leverage the offline retail and portable music devices partnerships, Jeff said that for each client, it would be a mixture of effort from Loudeye and the client. As he explained, most offline music retailers are also looking to launch their own music services, with their own branded players, so Loudeye would be a good fit in for such companies.

All of the current customers of OD2 will be staying on in the foreseeable future. And the company is now talking to all kinds of big consumer companies to launch their own music stores. Jeff likened digital music promos as the equivalent of digital coupons to be given to customers to build loyalty and affinity.

That’s what Coca Cola Company is trying with MyCokeMusic (and OD2 customer) in UK. I asked him whether that means Coke will launch a similar service in U.S. and he said that it is conceivable. Loudeye is also talking to other soft drink companies, beer companies, shoe and apparel companies and others interested in using digital music as a promo vehicle.

About the name change, OD2 will probably remain as the brand for now, and marketed as a sub-brand out of Loudeye. Also, Peter Gabriel, the founder of OD2, will remain as the “spiritual adviser” to the company, and now owns a substantial chunk of Loudeye shares, according to Jeff. He will not be part of the board of OD2 anymore, and will not have any day-to-day dealing with Loudeye.

Related:

More Details on Loudeye’s Acquisition of OD2

More Details on Loudeye’s Acquisition of OD2–Part II

Loudeye Purchases EU Digital Music Service OD2

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