Digital Flashback: Goes Public

It's been a rocky year on the market for downloadable music Web site.

The story on Wall Street in recent weeks has been the slump of tech stocks, but that hasn't always been the case.

For a time last year, one of the hottest properties on the Street was a share in the controversial downloadable music Web site On May 14, 1999, Inc. filed a registration statement with the Securities and Exchange Commission to sell an initial batch of 9 million shares to the public. The company quickly discovered it had underestimated investors' appetites.

The buzz around the site — which does not own the MP3 music format technology but offers free MP3 files from tens of thousands of mostly unknown bands — was so loud that the company eventually decided it could sell 12.3 million shares at an initial price of $28 each.

On July 21, the first day of trading, the stock shot to $105 a share before settling back to close at $63.31.

The company, led by outspoken Chief Executive Officer Michael Robertson, has had a contentious relationship with the music industry, which long frowned on MP3s for their lack of copy protection. But last year, began forging some high-profile alliances.

In April 1999, had announced it would sponsor the "5½ Weeks" summer tour by singer/songwriters Alanis Morissette and Tori Amos. Videos from that tour of Morissette performing "Thank U" (RealAudio excerpt), "You Learn," "Hand in My Pocket" (RealAudio excerpt), and "So Pure," still are available on the Web site in both the RealVideo and Windows Media formats.

Instead of paying the artists in cash — as is customary in sponsorship arrangements — said it would pay them in stock. When the company went public, Morissette made millions of dollars on paper.

Shares of, however, never again traded at those lofty initial prices. By August, shares were down to half their final opening day price. Some analysts wondered if could survive with a site based on technology it didn't own and with music it gave away.

More recently, the company was stung by a court ruling that said its online CD-storage and playback service infringed industry copyrights. is in settlement negotiations with the industry.

Earlier this month, Morissette filed a registration statement with the SEC to sell 100,000 of her shares. On Wednesday, shares closed at 9-5/8 a share — a decline of nearly 85 percent in nine months.