Record Labels Sign With Artistdirect.com

Moving in rare lockstep, four of the five major record labels put their money on the same horse yesterday in the race to peddle content online.

BMG Entertainment, Sony, Universal and Warner Bros. joined Cisneros Television Group and Yahoo in pouring $97 million into Artistdirect.com, a company founded by Marc Geiger in 1996. Geiger founded the Lollapalooza concert tour in 1991 along with Don Muller and former Jane's Addiction front man Perry Farrell.

Geiger and Muller serve as chairman and president, respectively, of Artistdirect, a company offering artist "channels" containing everything from MP3 downloads and T-shirts to the opportunity to buy CDs online. Ultimately, as technology evolves, Artistdirect is positioning itself to offer more multimedia content like music videos and news about the artists, making their "channels" behave more like channels in the television sense.

"It's like the MTV of the Internet or the Yahoo of music," says Cliff Friedman, managing director of Constellation Ventures and a member of the board.

"Artistdirect.com is a programming service that can break artists and propagate new artists."

Citing a quiet period before an impending IPO, Artistdirect executives were not available to comment.

For the record companies, the investment represents the latest in a series of baby steps as they jockey for position on the Internet.

Six months ago, companies like Artistdirect were being portrayed in the media as potential competitors to the major labels. Now, it appears, the labels are helping a number of viable venues to enhance their position online.

"Two years ago, they were saying the Internet is a bad thing and that it should go away," says Dave Goldberg, CEO of Launch.com. "It's a sign that they're embracing the Internet as a distribution and sales avenue, not fighting it."

Over the past year, the record companies have been distributing their investments carefully across the industry in a strategy to create a competitive environment among a number of companies offering music content online.

Currently, MTV-branded sites including MTV.com and VH1.com are the clear leaders in offering music on the Web, with 2.67 million unique visitors in November, according to Media Metrix. MP3.com was second with 2.02 million visitors that month, Launch.com was third with 1.8 million hits and ArtistDirect followed with 1.53 million.

Artistdirect is the latest in a number of online investments for Sony, which include Launch.com, Listen.com and Spinner.com, which was later bought by AOL.

BMG Entertaiment and Universal run Getmusic.com as a joint venture.

Warner Bros. has been slowest to start spreading money around on the Internet, but a Warner spokesman says that is about to change with several announcements planned in the coming months.

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