(Reuters) (02/09/04)

By Sarah Han

Edited By Michael Bennett

NEW YORK, NY, USA - With consumers increasingly turning to the Internet to buy music, retailers are using creative strategies to bring them back to the physical shopping experience.

That was Virgin Entertainment Group's intent when, in December, it made the MUSIKUBE personal music guide (PMG) available in its Virgin Megastore in San Francisco.

New York-based MusiKube is planning to expand the device's availability in VEG's U.K. stores, as well as in other U.S. chains, VP of marketing Sunjay Guleria says.

The PMG is a portable handset that enables consumers to roam the store and sample 30-second clips of albums by scanning their bar codes.

The wireless kiosk uses a customized Hewlett-Packard iPAQ and in-store Wi-Fi connectivity.

There is no charge to customers using the device.

MusiKube personalizes the shopping experience by maintaining a database of users' musical preferences.

The device offers recommendations based on the music the customer scans while browsing through the store.

"Instituting a personalized, mobile angle is what we're all about. We provide all the features of an online retailer -- in a store," MusiKube COO Mike Pears says.

"So you have history, recommendation and ability to listen to everything."

"It's the new way for retailers to build a relationship with consumers."

The system remembers user activity and encompasses licensed samples of more than 2 million individual song tracks provided by Muze.

Muze, the database behind iTunes, carries 260,000 album titles, with 3,000 titles added every month.

According to a Muze spokesperson, it obtains its data legally, directly from the labels.

There is no charge for labels and artists to be added to the Muze database.

VEG is optimistic that the personalized shopping experience eventually will help boost sales.

"It gives consumers a reason to visit the stores by making it a bit more interesting and exciting. That's what we need in retail today," says Dave Alder, VEG senior VP of product and marketing.

So has Virgin found sales success with this innovative device?

Although he declined to provide specific numbers, Alder says, "The general conversion figures have been positive."

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