Entrepreneur Richard Branson's marketing savvy has made his Virgin Group empire seem larger than life, and his latest endeavor, an online radio network based in Los Angeles, is no exception.

RadioFreeVirgin.com is the first official online investment by Branson, chairman of the Virgin Group, who has pledged to pour $247 million into Internet ventures.

The online radio network, which sprung from the Web site for Branson's Virgin Megastore retail chain, is in beta testing and doesn't officially launch until Sept. 11, but it's already making waves. More than 400,000 users worldwide have downloaded the RadioFreeVirgin player, which allows users to listen to a host of online music channels.

In the overcrowded online radio market, the company's advantages include a strong affiliation with the Virgin Megastore chain, not to mention Branson himself.

"Building relationships is potentially quite important, and obviously Virgin has a lot of ability to do that," said Jeremy Schwartz, media and entertainment analyst with Forrester Research.

Accidental discovery

When Virgin Megastore launched its VirginMega.com Web site a couple of years ago, the site's developers thought streamed music would be a good accompaniment for users as they searched for their favorite titles to purchase online. A downloadable radio player was added as a small tuner buried in the VirginMega.com site.

In a short time, thousands of people had downloaded the tuner, through which they could listen to sets of streamed music specially created for the site.

"It got rave reviews, and we never spent any money on marketing or put it prominently on the site," said Zack Zalon, general manager of RadioFreeVirgin.

After about 100,000 people across the globe had downloaded the tuner, executives realized they had a viable business on their hands and brought a business plan for an online radio network to Branson.

Five months ago, RadioFreeVirgin.com was established as a separate private company owned entirely by Branson and headquartered in the Miracle Mile district of L.A., under the official name of Virgin Audio Holdings LLC. Users can now download a beta version of the RadioFreeVirgin tuner for free at www.RadioFreeVirgin.com.

There are already thousands of online radio sites in operation, according to industry analysts. The sites range from traditional broadcasters netcasting their over-the-air programs, to specialized broadcasters that focus on one type of music, to network-style companies like RadioFreeVirgin that netcast a wide variety of music channels.

"There's a whole slew of Web sites that are for music (but) I don't think (RadioFreeVirgin) is necessarily a late entrant. Radio via the Internet is still wide open, and I don't think anyone has established any kind of advantage," said David Davis, entertainment analyst at Houlihan Lokey Howard and Zukin.


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