SAN FRANCISCO (05/03/2000) - Forget Napster Inc. Imagine listening to music anytime, anywhere without downloading anything. This digital "jukebox in the sky," as some call it, could make the concept of owning music obsolete.
Two record labels, Sony Corp. and Universal, took a small step yesterday toward making the jukebox-in-the-sky a reality, announcing a deal to develop a subscription-based service for Internet audio and video that would be available on a variety of devices, including personal computers, wireless devices and set-top boxes.
"The music industry is constantly evolving to find new ways to reach our customer, the music fan," Al Smith, senior vice president of Sony Entertainment, said in a statement. "The number of possibilities for this is very exciting, and we look forward to working with Universal to discover the best opportunities for consumers and our businesses."
Both companies withheld details of how the system would operate, but a Sony spokeswoman said the plan is to offer some combination of downloading and on-demand streaming of music. A possible channel for such a service could be the Web site that Universal operates with BMG, GetMusic.com or Columbia House, of which Sony is 50 percent owner. Combined, the two record labels account for 45 percent of recorded music sold in the U.S.
This is the first partnership for the music divisions of Sony and Universal, which historically haven't been allies in the music business. It is a sign that they take seriously the threat posed by EMI, Warner and America Online Inc.
(AOL), which would merge into one company pending shareholder and regulatory approval. AOL then would become the obvious vehicle for the distribution of EMI and Warner recordings on the Net.
The deal also prepares the two record labels for the post-Napster world of music consumption, where existing copyright laws might prove unenforceable. The labels' only alternative, then, is to offer a service as appealing to consumers and easy to use as Napster and any of the dozen or so other MP3 file-swapping systems now available.
"You've got to give people a disincentive to cheat," says Dave Goldberg, chief executive officer of Launch.com, an Internet broadcaster that allows some customization of music while complying with existing copyright laws. For a monthly fee, Goldberg says, a record label could offer unlimited streaming of their music catalog and increase profits by eliminating the need to manufacture and distribute CDs.
Music fans could still download MP3s once the jukebox in the sky becomes commonplace, but few would choose to do so, just as the ubiquity of VCRs doesn't stop people from subscribing to HBO.