A Watchdog for Online Music

May 7, 2000

A Watchdog for Online Music

Issue in Depth
The New York Times: Your Money

By ALEC FOEGE

all him the recording industry's secretary of defense. As millions of college students use Napster and Gnutella software to swap free MP3 music files over the Internet, ignoring warnings about copyright infringement, Dick Wingate is helping the music industry fight back.

Barbara Alper for The New York Times
Dick Wingate shows off his vast collection at his home office in Westport, Conn. These days, however, he is helping record companies sell their music over the Internet.

Wingate, a senior vice president at Liquid Audio and a former recording industry executive himself, secured an agreement last month to provide crucial support for BMG Entertainment to sell its music over the Internet. Liquid Audio, an Internet music and software company based in Redwood City, Calif., will manage the technology for putting BMG's music online and combatting piracy. BMG, whose labels include Arista Records, is the world's second-largest recording company, behind the Universal Music Group.
With its big role in selling music on the Web, Liquid Audio was a major beneficiary of an April 28 federal court ruling that found MP3.com and its online music library in violation of copyright law. On the day of the ruling, MP3 shares plunged nearly 40 percent while Liquid Audio's rose more than 30 percent. It now trades at $12, below its $15 price when it went public in July.
Wingate, 48, says recording companies have no choice but to sell their music online. "Until the majors put significant amounts of their catalog into authorized distribution," he said in his mid-Manhattan office, a nondescript suite filled with piles of pop-music compact discs, "you're forcing music fans who want to download music to find unauthorized copies."
BMG, with artists including Santana and Christina Aguilera, and Sony Music Entertainment plan to sell their music online by means of digital downloads starting this summer. Other labels are expected to introduce similar plans.
ut a growing contingent in the online music industry believes that the tide of free online music will wash away the hopes of companies like Liquid Audio for significant revenue from digital downloads.
Free MP3 files remain far more popular than files that must be paid for among the young listeners most likely to download music.
"We make files available in a lot of different formats, and at this point Liquid Audio has been the least selected of those formats," said Larry Lieberman, chief executive of Musicmaker.com, an online music vendor.
Liquid Audio, however, changed its strategy this year, forming a partnership with Microsoft, whose Windows Media Player system was previously a competitor, and concentrating on distribution for all digital music formats -- not just its own.
Unlike many other Internet company executives, Wingate knows how to navigate the tangle of artists' concerns and rights issues that have so far slowed the labels' online transition. Kevin Conroy, senior vice president of new technology for BMG, says Wingate's industry experience and contacts made him a key player in forming the partnership.
"Frankly, we're really happy to have somebody who's in an important new media company also helping to shape the music business," Conroy said.
Wingate has long built his music industry credentials. In the mid-1970s, while a student working as a disc jockey for his Brown University radio station, WBRU, he somehow convinced Bruce Springsteen, already a hot ticket, to perform a paid show on campus for just 150 people. After graduation, Wingate landed a job as a product manager at Columbia Records, Springsteen's label. In the early 1980s, Wingate became an executive responsible for signing new artists at Epic Records.
His interest in technology goes back many years as well. In 1991, he became a top executive at In Touch, which sold kiosks to let record store customers preview digitally encoded snippets.
After In Touch went out of business because of the high cost of its machines, Wingate went to Arista in 1994 as marketing chief. He left two years later to become a new-media consultant to companies including BMG, Arista's corporate parent.
As a consultant, he impressed Liquid Audio's chief executive and co-founder, Gerald Kearby.
"It was clear that he knew the record business inside and out," Kearby said. "It was also clear that unlike many record company guys, he had the ability to morph his mind over to our side of the table."
Since joining Liquid Audio in 1998, Wingate has been instrumental in shaping his company's changing strategy and in coaxing nervous music labels online. He now has options on 111,000 shares, and he lords over an inventory of about 67,000 downloadable songs from more than 8,500 artists, some available as promotional freebies, others for purchase through 750 online retailers, including Amazon.com and CDNow. Liquid Audio has formed alliances with more than 1,400 labels.
Wingate's maneuvering has already had measurable results. Last fall, nearly 1,000 customers paid the same price as for a CD to download David Bowie's latest album in the Liquid Audio format, figures that impressed some industry insiders, considering the 45-minute average download. Wingate says broadband access will speed the download time once it becomes more widely available.
f course, his aspirations have a personal cost. Wingate often works 18-hour days that include frequent trips to Silicon Valley. However, he has made a point of working twice a week from his Westport, Conn., home office to spend more time with his wife, Karen, and two young children.
"I'm away so much, my little boy cries when I just leave for the day," he said with a sigh. "A revolution is a full-time, round-the-clock thing."

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