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New Record Company Aims to Make Some Noise, Online

A new company called GoodNoise Corp. in Palo Alto, CA hopes to capitalize on the growing demand for online music delivery via downloadable recordings.

The founders said it is the first record company to focus on the Internet as the primary platform for the sale and electronic delivery of music.

The company launched its own Web site and announced a strategic partnership with peermusic, a privately-held music publishing company.

In connection with the partnership, peermusic has taken a minority position in GoodNoise and Ralph Peer, II, chairman and CEO of peermusic, has joined the GoodNoise board of directors.

GoodNoise is a publicly held company, traded on the NASD OTC Bulletin Board under the symbol GDNO. The company was founded by Robert H. Kohn, 41, a high- tech industry executive and an authority on music licensing, and Gene Hoffman, 22, a high-tech entrepreneur who is a veteran of several technology startups. Kohn is chairman and Hoffman serves as its president and CEO.

According to Kohn, the music industry is witnessing the dawn of the era of downloadable recordings. "The music industry is facing a transition that is fundamentally affecting how music is delivered to consumers and how recording artists relate to their record companies," he said.

"The shift from vinyl records and cassette tapes to CDs was significant, but it's nothing compared to the changes now being driven by the Internet. In five years, we believe that well over 50% of music will be purchased and delivered electronically."

The company said that according to Jupiter Communications, online music revenues--which include advertising , merchandising and ticket sales--are expected to grow to $2.8 billion by the year 2002, up from $71 million in 1997. The market for online delivery of music, while still in its infancy, is one of the fastest growing market segments and is projected to be a $1.6 billion market by the year 2002.

GoodNoise said it believes that as Internet bandwidth increases and the market for recordable CDs and other devices that allow consumers to play the music on their home audio equipment expands, the online delivery of music will grow significantly. The company's objective is to build a repertoire of compelling music targeted to the segment of the market most likely to be the early adopters--the 18 to 24 year-old age group.

peermusic is a global network of music publishing and production companies operating from 30 offices in 25 countries with well over a quarter of a million titles in the company's catalog.



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