Company Town : Magazine on CD Aimed at Music Buyers : Publishing: The bimonthly is one of the most ambitious efforts of its kind. But with a still-small market, the risks are high.

Taking a bold leap of faith into a media frontier, first-time publishers Dave Goldberg and Bob Roback have launched a national magazine this month--on a compact disc.

The premier issue includes 75 music clips, an animated cartoon featuring a beer-chugging guy named SixPak and an elaborate interactive ad for Dewar’s Scotch. It sells for $8.99. Called Launch, the trendy entertainment bimonthly is one of the most ambitious efforts in the fast-growing business of electronic publishing and the first to focus on popular music, movies and computer games.

A score of multimedia pioneers are gambling on CD-ROMs becoming the hottest entertainment medium since CDs themselves. The digital format, which delivers a mix of text, graphics, animation, video and stereo sound through home computers, provides a way for publishers to offer editorial material that can’t be delivered on paper or even through on-line computer services. For the consumer, the multimedia discs offer a new way to keep up on news and trends while being entertained.

At least that’s what 2Way Media hopes. The Santa Monica company plans to distribute Launch in about 3,000 software, computer and music stores by the end of the month.

Goldberg, 27, and Roback, 28, are tapping into a multimedia market in which, despite phenomenal growth and a great deal of hype, the failure rate is extremely high. While everything from plant encyclopedias to interactive porn movies have been making their way onto CD-ROM, only a few enterprising souls have ventured to put out magazines in the format.

The risks are high. The most daunting hurdle Launch and its fellow start-ups must overcome is the fact that there’s still a relatively small market for CD-ROMs, and an even smaller group of people willing to use them to “read” a magazine. At the beginning of the year, the United States had about 15.9 million computers equipped with CD-ROM drives. Projections for 1996 hover at about 28 million, according to San Jose-based Dataquest Inc.

“The people using CD-ROM players today don’t know technology and don’t want to know technology,” said Neil McManus, executive editor of the Digital Media newsletter in San Jose. “If you’re calling yourself a mass-market consumer publication, your magazine has to be almost as easy to use as a regular magazine.”

Launch, like most CD-ROMs, takes some time to install and to learn to navigate. It also requires a sophisticated computer setup with a high-speed processor, at least 8 megabytes of RAM, sound capability and speakers.

What Goldberg and Roback are betting is that music will sell better than other topics on CD-ROM. During two years as a marketing executive at Capitol Records, Goldberg noted a high correlation between music fans and computer buffs. Of the approximately 75 million “active” music consumers in the United States (people who buy at least three records within six months), more than a quarter also own CD-ROM drives, according to New York-based record industry research firm SoundScan Inc.

Goldberg hopes music fans will buy Launch in addition to, not instead of, popular print magazines such as Rolling Stone, Spin and Vibe.

“We’re not trying to compete with Rolling Stone. You can’t do this in Rolling Stone,” he said, clicking a mouse and gesturing toward a computer that blared the opening riffs of a new release by rock band Elastica.

“I suspect the entertainment- and music-oriented [CD-ROM magazines] have a pretty good chance,” Digital Media’s McManus said. Placement in music stores may give music “digizines” an edge over those selling at software outlets because the environment is hipper and more conducive to impulse buying, he said. “At that price, I think a lot of people will say, ‘I’ll buy it and try it out,’ ” he said.

*

The newest wave of entries to the fledgling publishing category comes as the first real CD-ROM magazine, Redmond, Wash.-based Medio, turns 1 year old. Joining the few magazines on disc that have survived--chief among them is San Francisco’s Blender and Santa Monica’s Go Digital--are Trouble & Attitude, a bimonthly men’s magazine from San Francisco-based Light Rail Communications that premiered this month with Baywatch-style swimsuit footage and Esquire-style editorial, and Control, a San Francisco music magazine that premieres in June. Santa Monica-based Ray Gun Publishing Inc. plans to launch Mafia, a “cool, very high-end” pop culture CD-ROM magazine in an alliance with Philips Interactive Media by early next year, President Marvin Jarrett said.

Their survival will depend on creating a new market and sustaining it. “We think we have very good content, a very good interface and a good ability to attract advertisers,” Goldberg said. “The trick is to get it to consumers.”

Launch is targeting 18-to-34-year-olds and will distribute most of its discs at major retail chains such as Software Etc., Babbages, Egghead, CompUSA, Tower Records, Virgin and Camelot Records. The company is also in discussions with Musicland, which has 800 music outlets across the country, Roback said. All this, added to a bundling deal involving the Sony Discman, will add up to an initial circulation of about 150,000.

Launch is also selling annual subscriptions, one of the few similarities it has to traditional magazines. One of its most experimental features is its advertising. Lacking any precedent, Goldberg decided to sell advertising at the rate of $2,500 per megabyte. For the first issue, the company lined up Dewar’s, Tanqueray, Levi Strauss, Janus Investment Funds, Reebok, Cadbury-Schweppes, Nissan, Warner Bros., Virgin Records and Capitol Records. The ads run about 5 megabytes on average.

The first issue brought in more than $100,000 in advertising dollars, which the company hopes will make up the bulk of revenue. The rest will come from subscriptions and sales.

But even as they are pursuing an aggressive business plan for Launch, Goldberg and Roback are planning for the widely predicted demise of the CD-ROM. After setting up a World Wide Web site on the Internet, they say they are waiting until the day when Launch will be delivered on-line.