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EMI, BMG, AOL define universal Net music scheme

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Three of the world's five biggest music companies - EMI, Bertelsmann and AOL Time Warner - and streaming media specialist RealNetworks have launched what they all clearly hope with become the de facto system for digital music distribution.

Called MusicNet, it's a secure distribution platform that allows third-parties to sell digital music - and, by extension, any other digital medium - by download or stream, by subscription. The source of the chain is the music companies - EMI, Warner Music Group and BMG - who have licensed the entirety of their digital back-catalogue to the fledgling operation.

At the other end are the online equivalent of the High Street music stores. AOL and RealNetworks are the first to join, though neither have exclusive rights to the content, for sound practical and political reasons. After all, the last thing AOL wants is the regulators stepping in accusing it of reneging on the promises is made in the run-up to the Time-Warner merger. Besides, the music companies want to widen access to customers, not restrict it.

In the middle is MusicNet, which the partners claim will be an independently operated company, though we note that RealNetworks' boss, Rob Glaser, is the new operation's chairman and will act as its CEO until a full-time appointment can be made. Again, the deal between the music companies and MusicNet is non-exclusive, but then it has to be, they've done too many deals with rival operations, like EMI's tie-in with DX3.

However, all this emphasis on non-exclusivity seems more to do with convincing other music companies and music sellers that it's worthwhile signing up than catering for previous deals. The idea is clearly to make the distribution network as open as possible with the desired goal that all and sundry join in and we get, at long last, a universal music delivery system that anyone can use and isn't controlled by Microsoft.

It will be controlled by the music industry, of course, and it's telling that the partners make a specific point of extending the hand of friendship to Napster: "MusicNet will also license its platform to other distribution outlets, including Napster, provided such outlets satisfy legal, copyright and security concern," the partners said today.

Bertelsmann has a point to make here, don't forget, to help it show the world that investing in Napster and trying to persuade the rest of the industry to work with the sharing software company wasn't a complete waste of time and money.

That said, it's also a sign that the industry accepts there's a place in the digital music market for the likes of Napster, and that marks a major shift in opinion. It will be interesting to see whether Universal - the most vociferous in its damnation of peer-to-peer - and Sony join in.

Not that it needs them. With three of the 'big five' recording companies providing content, MusicNet has the critical mass that BMG's Napster initiative lacked.

However, if MusicNet is to become the universal 'one subscription gets you everything' channel - which is what the partners have their eye on - it will need the back of Sony and Universal. As Glaser put it: "Looking ahead, we hope that all the major and independent labels will join MusicNet to create one-stop music subscription offerings with unbeatable consumer momentum."

We shall see. RealNetworks and AOL both plan to launch their MusicNet-based music channels later this year. ®

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