Weekly Wire
NewCityNet Bargain Bin

By Dave Chamberlain

AUGUST 2, 1999:  At this point, there can be no doubt that e-commerce (electronic, online retail) is the wave of music retail's future. MP3 downloads, CDNOW.com, tunes.com, all named by the media as how we - music consumers - will buy music.

But serious music collectors draw much of their collections from used CD stores, something that - until recently - has been missing from the Internet. But brothers/Chicago businessmen Andy and Steve Grundy are changing that. Last April, the Grundys launched spun.com, which takes the purchasing and selling of used CDs to the virtual world. Unique to online commerce, spun.com not only sells new CDs, but also allows you to sell used CDs that are collecting dust on the shelf, and buy CDs that once collected dust elsewhere.

The two brothers, Andy, 32, and Steve, 37, didn't just leap head first into the online music retailing business. Prior to starting spun.com, Steve operated his own Internet business, acting as a site builder, an ICP provider and an Internet host. Andy spent nine years at Columbia Records, eventually working his way up to director of marketing and sales. Just in case there is a part of the music and Internet industries that the Grundys were not familiar with, the two hired Alex Luke, Q101's former programming director. "A lot of radio guys are just into radio," says Andy Grundy. "But Alex is into music. He may not know everything, but he always knows where to get it. It's hard to stump him."

The Grundys started spun.com after toying with the idea of starting a Website that would use Soundscan (a record sales monitoring network system, used by Billboard) to monitor sales. "But that was an industry driven thing," says Andy. "Not consumer driven."

"The idea of exchange came up," Andy continues, "because we figured that if you do something on the Internet, the Internet needs to be the ONLY place you can do it. It needs to supplement the rest of world."

It works like this: After going to spun.com, you tag what it is you want to sell using either spun.com's artist database or the UPC code number. Each CD is already assigned a dollar value of what spun.com will pay. You can then (virtually) shop around and purchase new CDs, or used CDs at used CD prices - essentially the same as trading in CDs in a store and acquiring credit instead of cash. As soon as the order is placed, spun.com receives the order and ships your CDs in a package - with return postage - large enough for you to ship the CDs you sold back to spun.com. The CDs are given a quick inspection, spun.com adds the new used CDs to its inventory, and the transaction is complete. "So far," says Andy, "there's only been one case of a person who said they sent the package and we never got it."

Grundy notes that when they launched in April, online consumers were only buying, but over the course of the past three months, almost all of those people are now selling as well.

Are sites like spun.com the beginning of the end for tangible retail record stores? "I don't think so," says Andy. "There's plenty of room for both to co-exist. There's been a lot of news about the MP3 [music downloading device], but it will be five, ten or even fifteen years before people will download entire CDs. I could download a CD anytime, but I want that CD for my car, my Discman. I DON'T want the hassle of having an MP3 with the same songs stuck in it. Also, there will always be people who like to walk into a store and buy a CD."

The Grundys have plans to try and work with used record stores as a wholesaler, creating a computer network to supply CDs that spun.com has in stock to record stores where space limits the amount of inventory it can hold. They also plan to implement a program of kicking back royalties off used CDs to the artists.

"On the Internet," Andy notes, "you are tying used product and people together."

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