Don't call it muzak.

DMX INC. PROVIDES A LIVELY MIX OF STEREO SOUNDS, FROM ROCK TO 'HEBREW HITS,' TO RETAILERS, RESTAURATEURS AND OTHERS WHO WANT TO STRIKE ALL THE RIGHT NOTES

DMX Inc. broadcasts musical backdrops direct to offices, retailers, restaurants and hotels around the world. It's music that is heard more than noticed - when browsing in a department store, waiting in a lobby, ascending in an elevator.

But whatever you do, don't call it "muzak."

"We work very closely with clients to make sure we are creating the correct musical atmosphere," said Christy Noel, vice president of marketing for the West L.A.-based company. "It's not just a 'background' service."

In fact, Muzak, the venerable Seattle-based outfit that pioneered the sonic equivalent of wallpaper more than 60 years ago, is one of DMX's main competitors. And though Muzak remains the world's largest provider of music to businesses, DMX is catching up fast.

The company (its name is an acronym for "Digital Music Express") has seen its client list shoot from zero to some 35,000 in the five years it has been offering the service - a list that includes Comp USA, Marriot Hotels, Koo Koo Roo and Gold's Gym.

Revenues also have skyrocketed, surging from $774,000 in 1992 to $17.3 million last year.

Nonetheless, like many technology start-ups, DMX - which is publicly owned and traded on Nasdaq's small cap market - has yet to turn a profit. For the second quarter ended March 31, the company reported a net loss of $3.5 million, compared with $7.8 million for the like period a year ago.

Wendy Kim, DMX's chief financial officer, said the losses were the result of capital costs to keep up with growing customer demand. She added that the company is close to breaking even.

DMX's stability also will be enhanced by an expected merger with broadcasting giant TeleCommunications Inc. Under that deal, which has not yet been completed, DMX will become a wholly-owned subsidiary of TCI Music Inc., a newly formed TCI subsidiary.

Rather than offering music that lurks quietly in the background, DMX offers what is known in the industry as "foreground" music - that is, a lineup of songs designed to create a very specific personality. The company offers more than 90 channels of CD - quality stereo music in genres ranging from alternative rock and acid jazz to show tunes and bluegrass. Even obscurities such as "Hebrew hits" and Danish music are available.

The company's library features more than one million titles, according to Noel.

Working with a DMX music programmer, a business owner can pick and choose from those genres. creating a personalized musical atmosphere designed to bolster the firm's image, maintain the appropriate energy level and connect with its clientele,

Each DMX program is continuously updated, ensuring that songs are not repeated.

The music is delivered directly to the business via direct broadcast satellite; a company also can receive the music on CDs. The service costs most clients about $65 a month, and includes royalties to music publishers ASCAP and BMI.

"Using DMX, there's a flow," said Noel. "There's a science which decides the order in which songs are played. You will not hear five female vocalists in a row. You will not go from a very slow song to a very fast song and jar the customers."

One of DMX's newest clients is Bloomingdale's, which selected the company to provide satellite- delivered music to its five West Coast locations.

The store has programmed six different musical line-ups for its various departments. The men's wear department, for example, features a mix of adult contemporary, folk rock and "hottest hits" - a mix which includes such artists as Counting Crows, Jewel and Natalie Merchant.

The junior's department, on the other hand, has a more high energy atmosphere, with dance and power hits songs, such as U2, Prince, Toni Braxton and Spice Girls.

"Many retailers overlook the importance of music in creating their atmosphere," said Jack Hruska, senior vice president of merchandising presentation at Bloomingdale's. "But music is extremely important. It creates the level of energy in our buildings."

Although the value of the right music to a business cannot be quantified, there is no question that it can make a difference, said Richard Giss, a partner in the trade retail services group of Deloitte and Touche.

"If you are distracted or the environment is not pleasing, you are less likely to buy," said Giss. "Music can set a tone for a business and also cover up distracting side voices.

"Where it is right you don't notice it nearly as much as when its wrong," Giss added.

DMX was founded in 1991, when the company began providing continuous music to residential customers via direct broadcast satellite. Its business division, DMX for Business, was established shortly thereafter and is the company's fastest-growing division, accounting for some 50 percent of overall revenues.

And Noel predicts more growth in the future.

While more than 50 percent of all business use music, according to Noel, only 5 percent use a professionally programmed service.

"There's a huge market for us to tap into," she said.

Spotlight

DMX Inc.

Year Founded: 1991

Core Business: Broadcasts commercial-free music to homes and businesses via satellite.

Top Executive: Lon Troxel, chief operating officer 

Revenues in 1992: $774,000

Revenues in 1996: $17.3 million

Employees in 1991: 15

Employees in 1997: 110

Goal: To broaden the distribution and use of DMX in both the residential and business market. place.

Driving Force: Higher company profile and a growing awareness of the benefits music provides to a business.