Music converts lift Get Digital: CD-ripping firm catching on, could hit mainstream with Canadian retail deal

May 9, 2005

Imagine walking into a retailer and dropping off a stack of compact discs to have them converted to mp3 files, just as consumers have done for years when having their film processed into photographs.

The scenario may take a while to play out in the United States, but it's on the cusp of becoming reality in Canada. And two local entrepreneurs who are putting their spin on digital music technology are largely responsible.

Doug Strachota and Brian Moore launched Get Digital Inc. in May 2003 to rip CDs-converting songs to compressed audio files, or mp3s-for people who don't have the time or skills to do it themselves on their computers. The proliferation of mp3 players, especially Apple's iPod, has provided Get Digital a steady stream of business.

The Iowa natives, who both graduated from Iowa State University with electri- cal engineering degrees, have ripped hundreds of thousands of CDs from the basement of Moore's Broad Ripple home for hundreds of customers.

Converting CDs into music files using a home computer and basic software isn't difficult, but it can be time-consuming.

Many clients have collections numbering at least 200 CDs and have the cash to let someone else load their music for them. The pair counts a founder of Netscape and the CEO of a major music label as clients.

While business so far has been conducted via mail shipments, Strachota, 32, and Moore, 34, are about to take their technology to a mass audience. Enter a contract signed a month ago with Canadian company In-Store Entertainment. Terms of the deal were not disclosed.

"Canada is really a test-bed for us," Moore said. "We're still in the early adapter stage, but we're confident we're going to see the interest."

In-Store Entertainment operates a small chain of record stores and provides electronic solutions to grocery stores and retail centers. Under the agreement, Get Digital would provide its ripping software to In-Store Entertainment, which is in discussions to offer the service to several retail chains north of the border.

Shoppers could drop off their CDs with their mp3 players and have the songs loaded and cataloged on the device, possibly within an hour, similar to the quickphoto format stores have deployed for years. The service could be available sometime this summer.

Name recognition

Get Digital already is making a name for itself in the United States. The company has been mentioned in MensHealth, Wired and Fortune. The last publication featured the startup in a February review of the products offered by Get Digital and competitors Ready to Play and Slim Devices, both based in California.

The magazine sent 100 CDs to each service, which ships prepaid boxes containing protected spindles to their customers. Most promise a turnaround within 48 hours, not counting shipping time.

Fortune writer and tech guru Peter Lewis lauded Get Digital as the most polished of the three services, but also the most expensive.

The company charges $1.99 each to rip up to 200 CDs, $1.49 each for 201 to 400 CDs and 99 cents each for more than 400. Orders must include at least 50 discs.

Lewis credited Get Digital for including a three-ring binder with a printed catalog of the collection, featuring album art for each CD. Lewis also said Get Digital did a better job than the others of tagging and grooming artist and CD information. Customers also receive an archive of their collection on DVD.

Strachota and Moore said they think their cataloging and tagging process will distance Get Digital from others. The two have a patent pending on their automated ripping service using DataFix technology. Other ripping programs use data from various sources when providing artist and song information. The use of different sources can lead to inconsistencies throughout their databases, which are used to tag CDs. Using DataFix, Get Digital technology inspects and fixes the data so no editing is required, they said.

Denise Gosnell, an intellectual property attorney at Indianapolis-based law firm Woodard Emhardt Moriarty McNett & Henry LLP, is guiding Strachota and Moore through the patent process. The application has been pending for more than a year and will likely take two to four years to get approved, she said.

"We have every reason to believe they will be the innovator, and the market will be licensing [the technology] from us," she said. "There's a huge market there."

Major electronic retailers and an Australian company have contacted Strachota and Moore about possibly offering the ripping service in their stores. They also have had conversations with the product manager at iTunes, the Apple service that lets users download mp3 files for 99 cents each.

Strachota and Moore wouldn't reveal Get Digital's annual revenue, but said it is in the hundreds of thousands of dollars.

Plowing $30,000 of Strachota's own money into equipment and operating out of Moore's basement has enabled them to keep overhead down. Revenue has grown, however, through various partnerships and some Internet advertising. The Canadian deal, no doubt, will help tweak the coffers, too.

Partnerships critical

Purchasers of Escient Technologies LLC's FireBall, essentially an mp3 player for the home, can have their system loaded by Get Digital. And buyers of the Sonos Digital Music System receive a coupon to get their first 25 CDs ripped by Get Digital for free. Locally based electronics retailer Ovation offers a drop-off service in its nine stores for patrons who want their CDs ripped by Get Digital.

"We feel that Get Digital offers the best and highest-quality solution that's available," said Bill Carson, Escient's vice president and general manager. "It's not the lowest cost, but for our clientele and our dealers' clientele, it provides them with features that they would expect when they purchase a high-end product like an Escient FireBall."

The Fireball ranges in prices from $2,000 to $5,000.

There's the familiarity factor, too. Strachota worked for Escient before owner Scott Jones sold the company to Japanese electronics manufacturer D&M Holdings Inc. in May 2003. While there, Strachota was involved in the FireBall project. A previous job with Texas Instruments brought him to Indianapolis in 1997.

Moore arrived in the city following graduation from Iowa State University in 1993 to work in a sales office of Palatine, Ill.-based Square D, which manufactures electrical switch products. He took time off to earn his MBA from Indiana University in 2001.

The pair were acquaintances in college but formed a friendship and business partnership after recognizing each other while in line at a Broad Ripple restaurant.

Strachota, meanwhile, had met Matt Goddard while the two worked at Escient. Goddard, now an employee at Sterling Creek Software in Fishers, wrote a portion of the software involved in the ripping process while at OpenGlobe. From the relationship, Get Digital has an affiliation with Sterling Creek, which provides software and technical support for its ripping service.

In June, the two companies will take their partnership a step further when they abandon their current quarters to lease shared space in Greenwood.

"We wouldn't have jumped on board if we didn't believe in what they're doing," Sterling Creek CEO George Jones said. "It's a considerable development effort. I think they have a great product."

The additional square footage will provide Get Digital more room to run more ripping machines. In Moore's cozy basement, the sole contraption manufactured by Plymouth, Minn.-based Primera Inc. is about the size of a nightstand. Four CDs can be converted at once, and 100 can be finished in about an hour. The steady background noise of discs being placed for ripping resembles the sound of an inkjet printer slowly spitting out pages.

Above the chatter, Strachota and Moore continue to discuss the company's future, knowing the contract in Canada could launch Get Digital to international status.

"We're starting to be recognized as an industry leader," Strachota said. "We really have big aspirations."
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