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)

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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.

Hi there,

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

iTunes
"Analysts have estimated that Apple spent about $35 million to $40
million to build the iTunes technology platform. "
http://www.ciol.com/content/news/2003/103121602.asp

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
http://www.macnn.com/news/22482


Napster
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.
www.pocket-lint.co.uk/news.php?newsId=6

Roxio also acquired Napster's intellectual property and technology
patents for around $5.3 million in November 2002
www.thestandard.com/article.php?story=20040506205647555


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
thereafter.
http://www.forbes.com/tool/html/00/apr/0420/feat.htm

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,
Tox-ga


Search strategy:
Google search - combination of terms such as roxio, napster, rhapsody,
real media, itunes, apple, invested, startup, spent, yahoo launch,
music to yahoo
://www.google.ca/search?hl=en&ie=UTF-8&q=roxio+acquired+napster+million&meta=
://www.google.ca/search?q=napster+startup++million&hl=en&ie=UTF-8
://www.google.ca/search?hl=en&ie=UTF-8&q=%22apple+spent%22+itunes&meta=

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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.

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

Petertlee-ga,

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

Best regards,
Tox-ga

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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.

Thanks

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

Hello,

I will work on that question right away.

Best regards,
Tox-ga

Exactly answered question as asked.

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...

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:
http://www.zip-code-database.net/listings/ipod.htm