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Wash Post Sums up Music News...

Deals Struck For Online Music Sites

http://washingtonpost.com/wp-dyn/articles/A41066-2001Apr4.html

By Christopher Stern
Washington Post Staff Writer
Thursday, April 5, 2001; Page E01



The music industry yesterday announced a flurry of deals intended to make it easier to sell and listen to songs online, as companies rush to capitalize on Napster's planned demise as a free service.

MTVi Group, the Internet arm of the cable music channel, yesterday launched a new Web service that allows people to download songs -- for a price -- from all five major record companies. It is the first site to sell such a variety of music.

Also yesterday, Microsoft's Internet service, MSN, announced that it is starting a radio-like service called MSN Music that will deliver "near CD quality" music over the Web. The new service will include several genres of music such as blues, folk and hip-hop, but will not allow copying or listening to a specific song.

And Universal Music Group, the world's largest music company, has reached a tentative agreement to acquire EMusic, an online service that allows consumers to download songs from a limited number of bands, mostly on independent record labels, according to sources familiar with the deal. Universal Music Group plans to convert EMusic into a Web site where people can download songs from its recently announced Duet service, according to one source. Duet is an online partnership of Universal and Sony Music Entertainment.

On Monday, three of the world's largest entertainment companies, AOL Time Warner Inc., EMI Group PLC and Bertelsmann AG, announced plans for a copyright clearinghouse for companies that want to sell music on the Web.

The activity is part of the the music industry's preparation to compete for millions of Internet users who soon will no longer be able to download songs free from Napster. The online music service plans to begin charging users this summer after a court ordered it to stop them from trading copyrighted music without paying for it.

"There is no way to switch users off of Napster, if there is no where else to go." said Ashish Singh, vice president at Bain & Company, a global consulting firm.

It remains to be seen if Web users will pay for music they once downloaded for nothing. Napster interim chief executive Hank Barry has said he expects fewer than 3 million of the service's 60 million registered users to pay for it.

The pay services will still have to compete with Gnutella and Freenet, which allow users to share songs free.

The music industry is not the only entertainment concern trying to convert Internet users into paying customers.

Major League Baseball recently announced a deal with RealNetworks Inc., a Seattle-based company that provides audio and video entertainment over the Internet. Under terms of the deal, Web surfers will no longer be able to listen to baseball games over the Internet without paying a small subscription fee. The National Basketball Association had already signed a similar deal.

MTVi Group chief executive Nicholas Butterworth said his company became the first to sign a deal with all five major record labels because of its superior technology, not necessarily savvy dealmaking.

MTVi is launching its service in partnership with RioPort.com Inc., which has created software to keep track of the various parties that need to be compensated when a song is sold. In addition to the record companies, performers and songwriters also are entitled to royalties. An elaborate system has been established in the offline world to distribute those fees, but a standard has yet to be developed for the Internet.

"Each label takes a slightly different approach to copyrights, but RioPort has made that invisible to consumers," Butterworth said.

Butterworth expects the music industry to spend the next several months experimenting with different models of providing music on the Internet. In addition to allowing users to download individual songs, companies are also expected to charge monthly subscription fees that would allow an unlimited number of songs to be downloaded.

"We are going to do everything we can to make music sales go up," Butterworth said. "There is clearly a lot of demand for digital music."




© 2001 The Washington Post Company