Nov. 10 - ?6, I993__:_j fiiirsnusos BUSINESS TlM£S
`
`_
`
`5*.»-.5
`
`Photoby|JI“1. tt
`SigI_1tsound.com is seeking equity financing to help fluid its growth strategy. Art Hair, left, is chairman
`and Scott Sander CEO of the Mount Lebanon company that makes recordings available via downloading
`from the Internet
`
`iiiteriiet fiifoi pioiieers dos/oloadahie iiiiisic sales
`Technology, resistance on part of record companies could slow
`efforts to grow business in a inarket now valued at $116 million
`Br KAREN Kovirrcn
`sell to record labels, artists and
`others who own the rights to au-
`dio recordings.
`This may not be easy to do.
`Record companies have al-
`ready taken a hard—line stance
`against the online sale of music,
`which they see as potentially si-
`phoning oif their profits.
`And consumers may not be
`hip to theidea that, for now.
`songs downloaded from Sight-
`sound.ccLrn‘s site can only be
`played on the computers they're
`downloaded to.
`
`‘ vice that makes it possible
`to distribute and purchase mu-
`. sic over the Internet. But is the
`
`market ready for the company?
`Founded as Digital Sight!
`Sound in 1995, Sig_htsound.com
`holds patents to technology that
`makes it possible to download
`music over the Internet fora fee.
`
`Earlier this year, the company
`took this technology and built
`a World Wide Web-based ser-
`
`Still, company executives be-
`lieve these issues can be over-
`
`lglltsfl-Lll'lCI.CUl‘I1 is ready to
`hit the electronic com-
`merce market with a ser-
`
`-.
`
`
`
`ing ahead with its service.
`"ify-oL1’1-e going to sell music
`in download fashion, you need
`to format it. do credit card pro-
`cessing onlinc and provide ma-
`terials to market and promote
`it." said Sightsoundcorn presi-
`dent and CEO Scott Sander.
`
`Sightsour1d.com handles all
`these tasks frornfits headquar-
`ters on Washington Road in
`Mount Lebanon. where it em-
`ploys 6 people. Working with1a-
`bels or individual bands, the ‘
`
`co rnpany takes recordings and
`puts them in a computer-code
`format so they can be played on
`
`vice around it. which. it hopes to
`
`come. So the company is mov-
`
`See DIGITAL page all
`
`
`
`SIGHTSOUND TECHNOLOGIES
`EXHIBIT 2114
`
`CBM2013-00020 (APPLE V. SIGHTSOUND)
`PAGE 000001
`
`

`
`
`
`results?t’ssohi
`‘ Nov. 20 - '23, 't'99‘a
`50
`Pi'l"I‘3liL1RGH Business TIMES
`f @‘lf@ll'fdl:itocu,l musicians Dlzidrmn Sonspnrticzputed in n ‘virtuolitour’i/in lntemet this summer"
`
`From page 3 -
`
`the World Wide ‘Web. It also scans in pl‘1_0~
`tos and other promotional materials to sell
`the music so that browsers can learn more
`
`about the bands they hear.
`"in a store. you might have a cardboard
`cutout.“ Mr.» Sander said. "We do packages
`where people can see a video and getsomei
`exposure to the'band.”
`The demand for such a service is just be-
`ginning to develop — International Data
`Corp. estimates the marlcet is currently
`worth about $116 million.
`
`But Goldman Sachs, a New York Ci1yin-
`vestment barildng firm. has expressed con-
`
`fidence that it will growlarger.
`Thefirm is helping-lSi'ghtsound.coIn ne- ‘
`gotiate a round ‘of-'ec1'uily financing to help
`fund its growth ‘strategy. Mr. S'and.er de-
`clined to say how.,much'-rnoney the com-
`pany is planningvto raise.
`'
`"Theyare trying to line up companies in
`the media and entertainment industries '
`that might wantto invest in us,” Mr. Sander
`said.
`-
`'
`
`Though the market for Sightsounds tech-
`nologyjs still ernerging. Tom Cossie, pres-
`ident and CEO of Dormont-’I'echnologies
`Ltd., 21 Ross Township—has_ed firm that de-
`velops marketing s'ofi:ware.for the music in-
`dustry, thinks'Sights_ou_nd.coni is hitting _it
`
`at the right time.
`"Downloading music from the Internet
`is becominga trend thatlcan no longer be
`avoided." he said. "More and more artists
`
`and labels — indies and majors - are mak-
`ing their music available over the Net. There
`is also a rising tide'ofNet-only labels and
`artists, as well as technology-to address
`piracy issues."
`‘Some industry experts say the Internet
`is an ideal medium for, distributing music.
`~ "Alot of bands will utilize-it because they
`have no other way to-reach people through-
`out therworld." said Andy Morris, manager
`-of‘Ali/llvl'.Managem eat, a New York City-
`. based recording industry management firm‘
`
`that has managed local bands, including
`Dharma Sons.
`'
`—
`Mr. Morris and.Dh’ar.ma Sons took a shot
`
`V at Internet marketing this surnme1',partic-
`ipating in_ a "Virtual Tour” organized by
`Sightsoundcorn.
`'
`The tour, conducted onlineat Sight-
`sound.com’s Web site, enabled surfers to lis-
`
`ten to the music of Dharma Sons and eight‘
`other bands and download selections they
`lilted for a fee.'lt also allowed them to ex-
`
`perience the cities the tour stopped in
`through digital images.
`
`PAGE 000002
`
`“I deal with record companiesievery day
`in New York and it's definitely an issue with
`them,” Mr. Morris said. "And. it's going to be
`for awhile."
`'
`.
`'
`'
`I
`Without the support of record compa-
`nies, which control the rights-to a majori-
`ty of the music distributed, Sightso1'md.com
`will not have a product to package.
`_
`The company has not negotiated rela-
`tionships with any labels yet. But Mr. Mor-
`ris‘ thinks it eventually will.
`“A lot ofthese companies are having to
`address these issues right now because their
`arizists are going to want to sell records in
`this format and they want to get their roy-
`alties,” Mr. Morris said.
`.
`_
`' This is exactly what Sightsoundcom is
`counting on.
`_
`’
`.
`“This market will com :2," Mr. Sander said.
`“And when it does, someone has to be able
`to service it at‘ scale. We are in a state of
`
`readiness to do that."
`
`-
`
`_
`
`\ll_esiStani_:e.from-recording industry trade
`_i fh elffieeotdilln gj.
`_1,_1s ry_
`Artists 'A'sso'ciati on 'rn_a;y he hfiore'di‘tficult
`to overcome.
`'
`'
`" 0'
`"lvthinlc tl1ey’ve set‘ a tone for the debate '
`on this issuethat they are doing everything
`they can 'tof15"rE}t‘ée“r,.the rights of their mem-
`bers,” said Paul Verna, pro a_udio'~*editor for
`Billboard Magazine, a_ weekly publication
`that coversthe music industry. "And that
`means malcing.su_re people can't dowpload
`music for free:_j'—*" tlta‘t"so'rneh'ow._th'ere"s a
`payment -mechanism." '
`"
`'
`Because Sightsound.com encrypts mu-
`sic so that it can onlyibe played on the com-
`puter it isdownloaded to and collects a ‘fee
`before deljyering’ the goods. Mr. Sander be-
`lieves the‘ company will have the support of
`groups hire‘ the RIA..A._
`They may not get the support ofrecord
`executives who see download service
`providers like Sightsoundcom cutting into
`their profits.
`.
`,
`-
`
`"It was really quite well done," Mn Mor-
`ris said.
`
`To date, Sightsound.com has packaged
`80 songs for distribution on its site. But sell- I
`ing these songshas 'n_ot.been easy.
`Part Of the p.1‘Cil?le,rr1-is.that the company
`does not ship“CDs ortapes that can be
`played anywhere.'Theflconipany delivers the
`selections consume‘;-s purchase to their
`computers — and these selections cannot
`be played elsewhere.
`While this may please recording indus-
`try trade groups concerned that music is
`being distributed free to large numbers of
`people via the Internet. some consurn.e.rs
`may find it unappealing.
`Also. downloading music from the Sight-
`sound.com site requires technology that
`mostconsumers do not have yet, such as
`high-speed ISDN lines and cable modems.
`Once‘ thistechnology is widely available,
`Mr; Morris thinks consur'ners will eventu-
`ally use it to download music.
`"It's like (digital video discsl," he said.
`“DVD isnow the hip thing people want to
`buy. but it tool: awhile for that to happen."