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Major labels' deal mirrors Sony/EMI agreement

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'Big five' music companies Bertelsmann Music Group (BMG) and Universal have agreed to combine their upcoming digital music distribution programmes into a single operation run by Universal. News of the deal, leaked anonymously to music company MP3.com, comes on the heels of a similar arrangement struck between Sony and EMI, two other 'big five' labels (see earlier story). The Sony/EMI deal appears to be centre on a decision by EMI to back Sony's digital distribution technology, codenamed MagicGate. It's not yet clear whether the deal simply involves EMI's use of MagicGate or that Sony will handle all of EMI's online sales. The BMG/Universal agreement is remarkably similar, with BMG backing Universal's Providence digital distribution technology, an offshoot of the company's e-commerce system development. Rather than licensing the technology, BMG has chosen to outsource its online distribution system to Universal. Fortunately, neither deal should impact the wider issue of the need for a universal digital music format, currently being explored by the music industry-led Secure Digital Music Initiative (SDMI). Like IBM's Madison Project (see earlier story), both MagicGate and Providence are technologies that focus on music distribution, rights management and e-commerce -- the specific format the music is stored in is, to an extent, not at stake, since multiple formats can and will be supported. The SDMI will ultimately define a specification detailing what a secure distribution system must do, and there's no reason to believe that MagicGate, Providence, Madison and other products, most notably the one Microsoft is working on, won't meet that spec. In fact, it's the Microsoft product that's likely to be driving the music industry agreements. If there's one thing the major labels fear more than MP3, it's the idea of Microsoft dominating the delivery of digital content. Microsoft is working hard to develop a content delivery system that it will embed in Windows 2000, a development programme brought home by the company's $15 million investment in rights management software specialist Reciprocal. ®

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