The sound of Web music is a-changin'

As the five major record labels embrace online music subscription services, you can expect to soon pay a fee for digital downloads and streams just about anywhere online.

In just the past week, a whole chorus of online music services have begun building digital jukeboxes. RealNetworks Inc. and the three major record labels have unveiled a digital music subscription platform, dubbed MusicNet. The labels supplying the tunes are Bertelsmann AG, EMI Group PLC, and AOL Time Warner Inc.; MusicNet will charge an undisclosed fee for the service.

Then, Yahoo Inc. paired with the other two major music labels, Sony Music Entertainment Inc. and Universal Music Group Inc., to offer a subscription service, called Duet. Prices will be announced when the service debuts this summer.

Also this week, RioPort.com Inc. became the first music service provider to sign content deals with all five major music labels. The company has also teamed with MTVi Group LP, the digital music arm of the pop media giant owned by Viacom Inc., to sell music downloads from a library of more than 8000 songs.

That service will charge per download, at a range of US$0.99 to $1.99 per song, and $11.98 to $18.98 for albums, executives say. The service will be available on Radio MTV.com and VH1atWork Radio, with both digital download and streaming capabilities. They expect to offer about 10,000 tracks by the end of April, which is about half the download catalog of all the companies, but only a small fraction of their total music properties.

On Wednesday, Microsoft got on stage too, announcing plans for a digital radio station on MSN that will evolve into a subscription music service.

Of course, even Napster plans to charge. It will roll out a subscription service this summer in conjunction with Berteslmann. And former Napster competitor Scour.com is also singing the subscription tune, with a new fee-based service that lets you download and transfer music, images, and movie files that have been legally obtained.

Why pay to play?

These new partnerships may please sites and music labels, but they may be whistling to themselves for a while. These services are just the start of a changing industry, says Malcolm Maclachlan, an International Data Corp. (IDC) media analyst.

"Subscription services are the future, but the future is not now yet," Maclachlan says. "I don't think people are quite used to the idea, and the real problem is the content and formats are not set."

MusicNet and Duet are cases in point. Neither service has pinned down what music they'll offer as downloads and what will be only available for streaming. Nor have they announced their format choice, but you can bet they'll build in digital-rights management for security.

Duet will let you access Universal and Sony music from various Yahoo sites, including Yahoo music. It will initially offer only on-demand streaming service, but later will support downloads, according to David Mandelbrot, vice president and general manager of entertainment at Yahoo. Music fans can compile personalised playlists and share them with other Duet members.

As with MusicNet, key details about pricing and some options--such as whether music files can be exported to portable players--are not yet available. But Duet will offer multiple subscription tiers, with more options for the higher-priced tiers, says Jean-Marie Messier, chair and chief executive officer of Vivendi Universal.

Yahoo won't disclose its choice of file format, but "it's safe to assume Duet will use one or more of the most popular formats," Mandelbrot adds.

Because MusicNet and Duet won't necessarily agree on technology, music lovers may have to deal with two or three different download formats, analyst Maclachlan says. "That's a real pain," he adds.

Conceivably, Yahoo could partner with both Duet and MusicNet to offer music from all five labels. The relationship with Duet is not exclusive, according to Yahoo's Mandelbrot.

Limited harmonies

Consumers may simply have to accept subscription services as the main way to acquire music online. But the services have a lot to live up to for their fees. Music mavens expect them to be reliable and easy to use, and to offer a broad catalog of music--not just from one or two labels--before users will pay to play.

"Music companies, you can say, have heard and understand the cries of the consumers," Howard Stringer, Sony chairman and chief executive, said at the announcement of Duet's music deal with Yahoo. "This is the start of a brave new world."

It's not the world of free and easy access that Napster pioneered.

Consider the resurrected Scour.com. A multimedia file-swapping service shut down by copyright lawsuits, Scour.com and its Scour Exchange service is being relaunched by CenterSpan as a fee-based service that lets you transfer image, movie, and music files that the system recognizes as legally obtained, the company says.

"Our vision of providing secure and legal peer-to-peer content distribution is a powerful reality. In effect, this is what Napster could have been," says Howard Weitzman, a Centerspan executive.

Still in beta, details are murky about the new Scour Exchange, which the company says is a fee-based service targeted to launch in the second half of 2001. Discussions among beta users indicate the new service will be far more restrictive than the Napster-like Scour of old.

"I kinda am starting to feel that I won't be able to get anything that's newer then 1920," notes Brian Weniger, a Scour beta customer. Others complain that charging a fee will force Scour fans to seek their music elsewhere.

Scattered notes

The Scour transformation highlights many of the complexities that sour the notes of digital music services. Besides implementing fees, most services have limited rights to popular music catalogs. Music-hungry consumers must often join multiple services to access all their favorite songs, and even then a label might not offer its entire discography in digital versions.

Companies with deals with all five labels, like MP3.com, only have certain rights to that music, Maclachlan says. "Musicbank and MP3.com have locker rights--if you can prove you own the CD by buying it online or putting it into your CD-ROM drive, the sites let you stream on demand a stored copy of that album," Maclachlan says.

"But people don't want to pay lots of money to digitize their own CD collections to use such services," he adds. "CD burners are cheap these days."

And while label-initiated services like Duet and MusicNet have a broader set of rights, none has deals with all five labels, Maclachlan says.

"Record labels aren't brands to consumers, who just want to get their Britney Spears and Christina Aguilera in one place," he adds.

Subscription services potentially offer reliable downloads and streams of your favorite music from portals suited to broadband. But for now, they're drowned out by the many illicit approaches to sharing music online.

"While Napster's network is running poorly since the implementation of its filter, LimeWire and BearShare work, Maclachlan says.

"The legal services have to be as good as the illegal ones or there is no impetus to pay," he adds. Subscription services will have to give people good reasons to get out their credit cards, he suggests.

(IDG News Service staff contributed to this report.)

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