Web Music Promoters Still Seek First Hit.

They call it the Holy Grail of the online music industry.

Somewhere out there is a band yet to be discovered that has enough talent and cross-genre appeal to sell millions of CDs.

But this band won't go through normal channels to make it big. This band will be promoted via the Internet, and its music will be sold both online and in brick-and-mortar stores.

"I don't know what the barometer for success would be in all this," said Mark Kates, president of Grand Royal Records, the label owned by the Beastie Boys. "In the movie community, it seems to be 'Blair Witch Project.'"

The race to find successful ways to market bands on the Internet hit high gear last week in Los Angeles at WebNoize '99, the largest conference to focus on the Internet music trade.

"As every unsigned artist gains access to the Web, the noise level, the volume level, increases dramatically and it becomes a lot harder to get attention," said Ken Hertz, a Los Angeles attorney who specializes in the music industry.

The push to finesse online promotion comes at a time when many in the music industry predict the coming of the "celestial jukebox," when a person with a fast enough Internet connection and a credit card can buy an album online and download it immediately.

The stakes are high. According to a study done by Jupiter Communications, online music sales in 1998 represented 1.1 percent of the $13.7 billion in recorded music sales. But by 2002, online sales are expected to represent about 14 percent of the market.

One of the first attempts by a major company to find and market the breakthrough Internet band came earlier this month when Universal Music Group, a subsidiary of Seagram Co. Ltd., founded a new record label known as "Jimmy and Doug's Farm Club."

Jimmy Iovine, co-chairman of Interscope Geffen A&M, and Universal Music Group Chief Executive Doug Morris also started a Web site (www.FarmClub.com) that will allow unsigned artists to upload music and compete for a record contract.

If a band is signed, Universal Music Group will market and promote it through the Internet, as well as providing brick-and-mortar distribution. In addition, the bands will be cross-promoted via special features on America Online and showcased on a television show on USA Networks.

"Doug and I were talking about it, and we said if we were to start a record company today, what pieces would it have and what would it take for the industry to be rejuvenated?" Iovine said. "The record industry needs to start mainlining music."

Iovine said bands to be highlighted on AOL and the television show will be selected by input from fans and record executives. "We're already getting e-mails," he said. "Our first launch will be Dec. 1. By February we will be full blown."

Others in the record industry, particularly people at independent labels, aren't all that thrilled with FarmClub.com.

"First off, I think the name itself - the farm label - is kind of condescending," said Daryl Berg, senior director of business development at The Orchard, a New York-based distributor of independent records. "You might as well call it 'Jimmy and Doug's Petting Zoo.' You put your music up on a Web site, you leave it, and there it is. Most bands have a one-in-gazillion chance of getting a record distributed. Is that what we really want - a giant (online) battle of the bands?"

Iovine said the characterization isn't fair because even if the group doesn't end up being signed, there will be marketing opportunities via individual Web pages, chat rooms and bulletin boards.

Still, all the labels have a long way to go before Internet promotions score big. "It's not like anyone sits down and worries about the Internet strategy when you are at the first marketing meeting for a band," Kates said. "Maybe they should be."

Even with established, big-ticket acts, attempts at online promotion have produced spotty results.

One of the most dramatic successes came from Warner Bros. Records, which developed an Internet-only animated short to promote Adam Sandler's new album, released in September. "The Peeper" received more than 2 million page views in its first 10 days. As a result, executives believe it provided critical support to the successful launch of Sandler's album, which set a record for first-week sales of a comedy album with 80,000 copies.

"With the Adam Sandler album, the key element was getting the short out early, three weeks before the album went to market," said Peter Standish, vice president of Warner Bros. Records. "The Internet marketing is going to become the new street marketing. We used to beg our bosses for money to make up cassette samples and hand them out to fans. This is the same kind of thing."

But when Virgin Records offered listeners the chance to download David Bowie's new album "hours..." for $12.99 before it was available in stores, the results weren't that impressive. Less than 1,000 people got the album online during the two-week promotion. The online version of "hours..." offered the same 10 songs as the in-store album, plus an additional track available only via download.

"That also speaks to the quality of the record," said Mike Farrace, vice president of worldwide marketing for Tower Records. "Not to 'dis' Bowie, but that wasn't his best record."

When the album did hit record stores, it sold just 30,000 copies in the first six weeks.