Thursday July 19, 1:50 pm Eastern Time
TheStandard.com
Vivendi Puts MP3.com in Play
By Michael Learmonth
Vivendi Universal's aggressive digital acquisition strategy is - officially - beginning to bear fruit.
When the Paris-based media and utilities conglomerate agreed to pay $372 million for MP3.com in May, analysts and journalists noted that the acquisition could provide a technology platform for Pressplay, the nascent music subscription service backed by Vivendi Universal and Sony.
On Thursday, Pressplay made it official. MP3.com will be providing the technological backbone of the service, including content delivery and management, as well as a massive database to collect payment information from consumers. MP3.com also will become the third big "affiliate" for the Pressplay service along with Yahoo and MSN.
"We had already built the back-end content delivery and subscription management system," said MP3.com President Robin Richards. "We've been doing this for four years."
Pressplay CEO Andy Schuon said Vivendi Universal's pending acquisition of MP3.com accelerated the deal. "It allowed us to get to know Robin and his team."
MP3.com initially developed the technology to allow it to launch its classical music subscription service last year. Ironically, it was the label's reluctance to grant licenses that prevented MP3.com from extending the service to popular music. But since the technology was built anyway, MP3.com began shopping it around to potential licensees. Given the legal and technical complexity of such a service, Richards said that pool of potential licensees dwindled to the few players with the resources and label connections to make it happen.
The MP3.com deal demonstrates the difference between Pressplay and MusicNet, the subscription service backed by the other three major labels, EMI, BMG and Warner. While Pressplay will attempt to establish a consumer brand as well as directly manage billing relationships with consumers, MusicNet will rely on its partners such as Real Networks and AOL to fill that role.
"I do believe it is going to be important to the consumer to be aware of the Pressplay brand," Schuon said. He envisions the brand coexisting with that of the affiliates, much like the way that "Intel Inside" coexists with that of PC manufacturers.
Despite the fact that the two companies are backed and financed by competing blocks of record labels, executives at both Pressplay and MusicNet said they expect to license music from all the major labels and as many independents as possible by the time they launch later this summer.
"We are trying to work towards that," said MusicNet CEO Richard Wolpert. "We have been in conversations with both [the other majors]."
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