Napster deal with MusicNet members faces stiff challenges in music industry
WEDNESDAY, JUNE 06, 2001 3:29 AM
- Canadian Press
SAN FRANCISCO, Jun 06, 2001 (The Canadian Press via COMTEX) -- The deal between Napster and MusicNet now pits three major record labels against two in the race to develop an Internet music system consumers will pay for. Napster, the former music industry bad boy, said Tuesday it struck a distribution deal with three major record labels that are launching a music subscription service this summer.
MusicNet is a venture between record label owners AOL Time Warner Inc., Bertelsmann and EMI Group, as well as Seattle-based RealNetworks, whose software lets users to listen to music and watch video via streaming technology through the Internet.
Their rival in the battle to turn the Internet from an undisciplined playground for Web mavericks into a corporate profit centre is Duet, a joint venture between Sony Corp. and French media conglomerate Vivendi Universal.
While MusicNet has cast its lot with Napster, Duet is working with MP3.com. The San Diego company, which was itself the subject of a massive lawsuit brought by the record labels last year, recently was acquired by Vivendi Universal.
Tuesday, MP3.com president and founder Michael Robertson gave the MusicNet deal with Napster little chance.
"You have Napster, with no technology, licensing from MusicNet, another company with no technology and no products," Robertson said. "It's a house of cards on top of another house of cards."
MusicNet's online subscription music service will let music fans listen to songs piped over the Internet for a yet-to-be-determined fee. Napster has also said it hopes to roll out a new version of its service this summer that would ensure royalty payments to artists and labels.
Napster chief executive Hank Barry promised the new Napster service would not deal in trafficking unprotected music files, and would instead rely on technology to protect and track the ownership of songs.
"We're not going to be moving raw MP3s around the new network," Barry said. MusicNet would require an additional fee from Napster users, on top of a separate subscription fee.
But a technical solution that satisfies the music industry's copyright protection concerns has so far proved elusive.
Warner Music Group issued a statement Tuesday indicating that there could still be serious hitches in the deal.
"As previously announced, our content will not be available to Napster as part of the MusicNet service until we are reasonably satisfied that Napster is operating in a legal, non-infringing manner..." Warner said in a statement.
EMI also said that Napster's current technology was not quite ready for prime time, despite the pending deal.
Mp3.com's Robertson said solving the technology problem is only one hurdle. To be successful, a service also has to reach deals with hundreds of individual music publishers, a process which is hindering MP3.com's goal of making music people already own legally available over the Internet.
"This is a bunch of hand waving at the moment," Robertson said. "There really is tremendous pressure on the industry as a whole to roll out one consumer-enticing product. This industry has been notorious about announcing initiatives that never see the light of day."
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KEYWORD: SAN FRANCISCO
SUBJECT CODE: entertainment
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