Beyond Oblivion, the digital music start-up that counts News Corp among its backers, is preparing for launch of its unlimited service later this year under the brand name Boinc.
The New York-based company is hoping that by bundling the price of access to its cloud-based library of millions of tracks into the cost of a smartphone or PC, consumers will be given a compelling alternative to illegal downloads, which still make up the vast majority of digital music consumption.
The group says that its negotiations with the four largest record labels are reaching a conclusion after 18 months. Beyond Oblivion expects to be able to satisfy their demands for upfront payments to access their catalogues out of its existing funding.
Beyond Oblivion raised $77m in venture-capital funding from Rupert Murdoch’s media conglomerate and the Wellcome Trust in March, on top of a previous $10m round from Allen & Company, which hosts the annual Sun Valley media conference, and Intertrust Technologies, a joint venture between Sony and Philips.
This week, its website will go live at www.boinc.com with a promotional video explaining its “play it all” proposition and encouraging UK and US customers to register for an invitation-only “private beta” testing phase in October.
Provided the service works as expected – and enough labels and device-makers sign up – a full launch is expected by the end of 2011.
The digital media sector is littered with well-funded but now defunct music start-ups, as entrepreneurs failed to find a sustainable business model in the face of large advances paid to music labels and piracy.
“Unlike any other service currently in the marketplace Boinc offers users access to all music with no download charges, no monthly subscription fees and no ads – while also ensuring artists are fairly compensated,” said Adam Kidron, Beyond Oblivion’s founder and chief executive.
“We are now gearing up for commercial launch in the UK and US, and will be revealing news about global music licensing agreements and commercial partnerships in the coming weeks.”
Beyond Oblivion says that it is close to signing up a large PC manufacturer and a leading smartphone maker to distribute its service, which will also be available for purchase as a standalone application or as part of a broadband subscription.
Boinc will give customers unlimited access to stream and download from its library for the lifetime of the device with which it is bundled, with no monthly subscription payments or advertising. It also features social networking components and “gurus” to recommend music and create playlists that can be shared by users.
Beyond Oblivion will compete with “cloud jukebox” services such as Rhapsody and Spotify, with online radio firms including Pandora and with Apple’s forthcoming iTunes Match, by scanning a user’s library of both legal and illegally acquired tracks and providing access to high-quality copies over the internet.
Boinc’s proposition of unlimited music bundled with a device is also similar to Nokia’s Comes with Music service, which in January was scrapped after two years in most markets having achieved limited success.
Although its consumer proposition sounds straightforward, Beyond Oblivion’s business model is complex.
For each Boinc-based device or subscription sold it receives a licence fee, set at different rates depending on the country.
Out of that fee, Beyond Oblivion pays a share to record labels and royalty collection agencies every time a track is played on Boinc.
A 40 per cent upfront payment is made to record labels, with a maximum royalty pay-out of 92 per cent, ensuring Beyond Oblivion retains an 8 per cent margin.
The company believes only 1 per cent will hit that maximum, with average pay-out about 80 per cent. But Beyond Oblivion has also promised a minimum 70 per cent share of its total annual revenues will be paid to rights holders, as a condition of securing their content.
By beginning its marketing campaign early, Mr Kidron hopes Boinc will generate buzz among early adopters before targeting mainstream music fans. Its branding will be similar to that of chipmaker Intel – well-known among consumers, but mainly sold via other companies.
This article has been changed from its original version to make changes to the third paragraph.