Monday April 2, 10:16 am Eastern Time
Music giants, RealNetworks build online powerhouse
(UPDATE: adds details, background, shares)
By Merissa Marr
LONDON, April 2 (Reuters) - Three major music groups moved on Monday to bolster their online clout with a deal to build a new online music heavyweight, MusicNet, with U.S. Internet software firm RealNetworks (NasdaqNM:RNWK - news).
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Seeking to broaden their exposure on the Web, the three music players -- AOL Time Warner Inc (NYSE:AOL - news), Bertelsmann AG (quote from Yahoo! UK & Ireland: BTGGga.F) and EMI Group Plc (quote from Yahoo! UK & Ireland: EMI.L) -- said the new service would be made available to other online services and could find its way on to a legitimate version of the Napster website.
The four companies said in a statement each would own a minority stake in MusicNet with the music companies licensing their music and RealNetworks providing the technology for the platform which will operate as a standalone independent company.
``We hope that all the major and independent labels will join MusicNet to create one-stop music subscription offerings with unbeatable consumer momentum,'' MusicNet's Chairman and interim CEO and RealNetworks head Rob Glaser said in the statement.
As yet, the two other major music players, Vivendi Universal and Sony Music , have not joined the venture, suggesting that MusicNet will rival their own planned joint subscription service, Duet, which is due to launch this summer.
``(MusicNet's) goal is to distribute music profitably to as many outlets as possible. MusicNet will initially license its platform to America Online and RealNetworks, each of which plans to launch branded online subscription services later this year,'' the four companies said in the statement.
Winning over MusicNet would be a significant step for Napster which has struggled to convince major music groups to join a legitimate service it is developing with Bertelsmann.
But the four companies said MusicNet would only license its platform to sites like Napster under strict conditions, provided it can satisfy legal, copyright and security concerns.
Napster, which operates a music file-sharing service, is currently under court sanctions to block access to illegally copied music.
The deal is seen as a major coup for Seattle-based RealNetworks which makes the popular RealPlayer software for playing audio and video on a personal computer. The company's shares were 5.75 percent up at $7-7/16 at 1400 GMT.
EMI shares were 3.18 percent down at 440 pence as investors lost patience with its own months-long merger talks with Bertelsmann. AOL Time Warner shares were 1.5 percent down at $39.55.
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