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Gateway Touts Online Music

March 27, 2003|Jon Healey | Times Staff Writer

Hoping to spark its flagging sales, Gateway Inc. is launching its most extensive promotional campaign to get consumers to buy new computers so they can copy and store music -- without violating copyrights.

The multimillion-dollar campaign launching today will include television commercials promoting Listen.com's Rhapsody service, the first time an online music service has been featured in a TV spot. Later this year, Gateway plans a large-scale effort to teach teens how to copy music legally.

Music-related activities have been "one of the top two reasons consumers buy PCs from us," said Gateway spokesman Brad Williams, so it made sense to focus on digital music.

Analysts say Gateway, which has posted $1.3 billion in losses the last two years, is on the right track.

"There's a segment of the population, as they get more into the whole idea of MP3 and digital online music in general, who look to upgrade," said Tim Bajarin of Creative Strategies, a technology consulting firm.

Many record label executives, however, have been suspicious of such efforts, contending that computer manufacturers have knowingly, and happily, profited from music piracy.

Apple Computer Inc., for example, drew brickbats from the labels for ads that urged consumers to "Rip. Mix. Burn," a slogan the Cupertino company eventually abandoned. And Gateway came under fire last April for running commercials urging consumers to download a song for free from its Web site and record it onto CD.

Gateway's new slogan, "RipBurnRespect," reflects its dual purpose of promoting consumers' rights to make personal copies of the songs they own without infringing on copyrights.

Although Gateway officials say piracy is bad for digital music, the record companies' efforts to combat piracy have left consumers confused about what they can legally do with a CD recorder, Williams said.

The company has launched a Web site, www.ripburnrespect .com, to provide instruction on downloading and CD recording, supply downloadable songs and explain the limits on legal copying.

Based in Poway, Calif., Gateway has posted seven consecutive quarterly losses.

As part of the new promotion, new computer buyers can pay $1 to receive a month of Listen's Rhapsody service and 50 songs from its catalog, as well as 100 free downloadable MP3s from EMusic, a San Diego-based unit of Vivendi Universal that specializes in independent labels.

Absent from the new effort is Pressplay, the online music service jointly owned by Universal Music Group and Sony Music Entertainment. Although Gateway has been offering computers loaded with songs from Pressplay, the offer has become embroiled in a licensing dispute with the National Music Publishers Assn.

Gateway shares fell 1 cent Wednesday to $2.34 on the New York Stock Exchange.

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