Universal online music plan gains AT&T, Matsushita backing

Cable and consumer electronics companies add major market opportunities

Universal's recent deals with InterTrust and fellow 'big five' music label Bertelsmann Music Group (BMG) appear to have attracted the attention of AT&T and Matsushita. According to a report in today's Wall Street Journal, citing unnamed parties "close to the negotiations", both companies are on the verge of joining Universal in its efforts to devise and implement an online music sales system. The latest pair of partners (if the parties do come to an agreement) certainly makes a lot of sense all round. Universal's programme will go ahead no matter what, but winning the backing of a consumer electronics company will strengthen its position. To reach the levels of success online music distribution is often predicted to achieve, the business is going to have to look beyond PC playback to a wide range of hi-fi units from separates to portable players -- and that means persuading the likes of Matsushita, JVC, Philips, et al to buy into your way of working. And with Sony pursuing its own online agenda in partnership with IBM, whose Electronic Music Management System will ultimately compete with Universal's, a deal with Universal would be good news for Matsushita too. As for AT&T, for all its dealings with Microsoft over Windows CE as a set-top box OS (see ), it still competes with the Great Satan on audio formats -- its a2b versus Microsoft's MS Audio 4.0. a2b, like Liquid Audio's system, has never managed to make the big time, partly through music industry distrust of the Internet but mostly because of the phenomenal rise of MP3. AT&T's format probably has a future, but without the major label support it's hard to see it making too much headway in the face of Microsoft and now RealNetworks. A deal with Universal gives a2b a major boost, especially given AT&T's desire to use the format as a way of pumping music in real time into people's homes via its cable network -- the 'pay-per-listen' model. It can't do that successfully without the content Universal can provide, and Universal can't pursue this alternative to the download market without the help of a major infrastructure provider like AT&T. ®

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