The success of the for-pay ventures is crucial to the future of the music industry, which has seen CD sales decline steeply-a result, record companies claim, of online file swapping.
Pressplay, the joint venture of Universal Music Group and Sony Music Entertainment, is expected to name an agency shortly to create an advertising campaign for its service. Ads are scheduled to appear by the fourth quarter.
Venables Bell & Partners, San Francisco, could be the front-runner for that $25 million assignment. It was one of four finalists for the account, and the other three were told they did not win the business, according to executives close to the matter.
The three other shops-Dentsu's Colby & Partners, Santa Monica; Interpublic Group of Cos.' Hill Holliday, San Francisco; and Omnicom Group's BBDO, San Francisco and Los Angeles-declined to comment. Venables Bell did not return calls.
A Pressplay spokesman declined to confirm the agency selection or review participants. "We have made no final decisions yet," said Seth Oster, VP-corporate communications.
Apple Computer, which recently launched its iTunes Music Store, has a head start on Pressplay, which has done little or no marketing to date. Apple this week breaks a multimillion-dollar ad campaign that includes five TV spots promoting iTunes. Omnicom's TBWA/Chiat/Day, Playa del Rey, Calif., handles.
Apple's service seems to be attracting customers. Consumers downloaded 1 million songs at 99¢ each in the first week of the service, according to Apple.
While Apple charges music fans per download, rival services-including two backed by major music labels, Pressplay and MusicNet (offered on AOL Time Warner's America Online), as well as Full Audio's MusicNow and Listen.com's Rhapsody-charge monthly subscription fees ranging from $3.95 to $17.95. Apple's iTunes won't be available to Windows-based PC users until later this year, offering an opportunity for rival services. Those services decline to specify subscriber numbers, although analyst estimates peg the range from 150,000 to 250,000.
Pressplay, launched in December 2001, offers unlimited streaming and downloading for $9.95 a month and the ability to purchase an unlimited number of permanent downloads, or burns.
"The reason we have not disclosed subscribers is we have not marketed the service," Mr. Oster said, adding, "We spent the first year focusing on consumer demand, developing the features that we knew that music fans would demand of a service they would pay for, and securing licenses for the music."
Apple could have an advantage in its fee structure. "Subscriptions are unnatural ways for people to buy music. People are buying when they feel like it and for that reason, Apple's online music store is groundbreaking," said Josh Bernoff, principal analyst, Forrester Research.
Compact disc shipments in the U.S. fell nearly 9% in 2002, while shipments across all music formats dropped 11%, according to PricewaterhouseCoopers. Illegal file-sharing, peer-to-peer networks and free music download services like iMesh, Grokster and Kazaa are one factor for that decline and are receiving a lot of the blame.