- The Washington Times - Thursday, September 4, 2008

NEW YORK

Being a trendsetter can be pricey. As any fashionista or gadget hound knows, the latest frocks and tech toys don’t pay for themselves. However, a new Web site is trying to make it profitable for music lovers to stay ahead of the curve — by paying them when other people purchase MP3s they have bought.

Popcuts of Berkeley, Calif., publicly launched its Web site early last month and charges users 99 cents per song. Thereafter, whenever someone else buys the same song, those who already have bought it get paid in credit that can be redeemed for more Popcuts music. The earlier you buy a song, the larger your cut of future sales.

Though credit is the current payment option, the site’s founders hope eventually to pay users in cash, too.

Hannes Hesse, 28, one of the company’s three co-founders, says the idea came from a desire to better align the interests of artists who want to sell their music and fans who want to get it for free.

“We thought that providing this extra incentive to buy a song legally, namely, owning a stake in that song, would make it more attractive to buy,” Mr. Hesse says.

Popcuts user Gary Yao, 25, says that although he would prefer cash to the current site credit that users earn, he likes being rewarded for buying songs. So far, he has earned $5.25 by buying tracks.

“It gives me an incentive to go out there and see what’s new and available,” the San Francisco-based product analyst says, adding that he has discovered a few new bands by using the site over the past month.

The site’s selection is still pretty slim - it includes about 700 songs from about 200 artists - but Popcuts is adding musicians through a deal it made recently with the music distributor DashGo Inc., and it is looking to connect with more distributors and with record labels.

Anyone making music can sell his or her tunes through the site while maintaining full rights to the work. The agreement between artists and Popcuts is not exclusive, Mr. Hesse says, so music makers also can sell songs through services such as Apple Inc.’s online iTunes Store.

Popcuts takes 10 percent to 20 percent of song sales. Artists can determine what cut they get, and the rest goes to fans.

Because fans who buy songs early get a larger cut of subsequent sales, Mr. Hesse thinks a lot of people will search for new tunes and buy those that sound promising.

Popcuts’ future is uncertain, though. Besides its small music catalog, it is navigating a market populated by several large, established players, including Apple and Amazon.com, Inc. that already have the allegiance of many digital music buyers.

Still, Mike McGuire, an analyst for Gartner Inc., says Popcuts’ model of sharing with users can be very effective. Besides making money, users might feel as if their purchases are investing in the bands on the site.

Then, “I as a consumer can say, ‘Hey, I’m doing my part,’” Mr. McGuire says.

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