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Q: Investment Cost of Launch a Music Download Service (i.e., itunes, napster, etc.) ( Answered 5 out of 5 stars,   2 Comments )
Subject: Investment Cost of Launch a Music Download Service (i.e., itunes, napster, etc.)
Category: Business and Money > eCommerce
Asked by: petertlee-ga
List Price: $50.00
Posted: 10 Jun 2004 10:57 PDT
Expires: 10 Jul 2004 10:57 PDT
Question ID: 359266
I'm trying to find out what the initial, up-front, investment cost is
to build a music download service (i.e., iTunes, Rhapsody, Napster,
Yahoo Launch, etc.). I don't need an exact financial number off an
analyst report but even a quote or estimate of how much investment is
needed to build this (it would be nice to also get some idea of the
on-going costs to run/operate this but I definitely need to know what
the initial cost is to just launc)

Clarification of Question by petertlee-ga on 10 Jun 2004 15:14 PDT
Ideally, you could find a quote from an "authority" or inside one of
the companies that says something like, "We have invested $100M to
startup the online music download service..." or something like this.
Subject: Re: Investment Cost of Launch a Music Download Service (i.e., itunes, napster, etc.)
Answered By: tox-ga on 10 Jun 2004 17:15 PDT
Rated:5 out of 5 stars
Hi there,

I found the information you are look for, related to iTunes and Napster.

"Analysts have estimated that Apple spent about $35 million to $40
million to build the iTunes technology platform. "

As for operating iTunes, an article by TechNewsworld notes that Apple
spent over $125 million to advertise the iPod and iTunes Music Store
in 2002

Roxio's acquisition of Napster, Pressplay and its integration of these
services, which resulted in the relaunch of Napster, cost the company
over $65 million, according to public documents.

Roxio acquired substantially all of the interests of pressplay.  Roxio
purchased its majority ownership for $12.5 million in cash and
approximately 3.9 million shares of Roxio common stock. Based on
Roxio?s closing stock price on May 16, 2003, the purchase price would
be approximately $39.5 million excluding transaction costs estimated
at approximately $1 million.

Roxio also acquired Napster's intellectual property and technology
patents for around $5.3 million in November 2002

The original Napster, however, was developed of boredom by a teenager
to help his roommates find mp3 faster.  He borrowed some seed money
from his uncle and got incorporation papers.  Months later, he
received $2 million from angel investors and received millions

Since you are looking specifically for initial launch costs, I will
post this now.  I will, however, continue to look for additional
operating costs for you.

Best regards,

Search strategy:
Google search - combination of terms such as roxio, napster, rhapsody,
real media, itunes, apple, invested, startup, spent, yahoo launch,
music to yahoo

Request for Answer Clarification by petertlee-ga on 10 Jun 2004 18:33 PDT
Thanks this looks great - thanks so much.

If you can find any other information regarding the financial aspects
of starting/operating the music services, that would be awesome.

Clarification of Answer by tox-ga on 11 Jun 2004 14:05 PDT

Are you looking for strictly North American music download service
initial investment?  Or for companies in Asia as well?

Best regards,

Request for Answer Clarification by petertlee-ga on 11 Jun 2004 14:35 PDT
I have another question out Question ID: 359733 
And would love your help getting an answer since you were able to
answer this question well.

Would love your help.


Clarification of Answer by tox-ga on 11 Jun 2004 14:51 PDT

I will work on that question right away.

Best regards,
petertlee-ga rated this answer:5 out of 5 stars
Exactly answered question as asked.

Subject: Re: Investment Cost of Launch a Music Download Service (i.e., itunes, napster, e
From: catfishblue-ga on 17 Jun 2004 14:05 PDT
Looking at what large companies paid is just one perspective.

There are free software tools available which would lower the cost
considerably. I mean open source "digital jukebox" software that would
allow someone to run the technical side of a service with minimal
startup costs. It exists and is free.

What might be costly is getting the rights to the music. But if Apple
already has a deal in place, you could accelerate that process by
trying to piggyback on whatever terms they obtained from the recording
industry. After all, it's in the industry's best interest to sell
through as many channels as possible...
Subject: Re: Investment Cost of Launch a Music Download Service (i.e., itunes, napster, etc.)
From: air2air2-ga on 29 Apr 2005 22:14 PDT
I am not sure how you are going to monetize it.  i mean you know the
margins, and how much there is avaiable to play with.  Plus, it's
almost impossible to protect such a product; see:

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