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Pressplay Gets BMG; MusicNet Next

Sony/Universal-backed digital music service Pressplay has snagged a licensing deal with BMG, the fourth of the 'Big Five' record labels to put its artists on the paid download service, a move that is expected to be mirrored by rival, AOL-backed MusicNet.

The New York-based Pressplay got the first jump in the race to win support from all the major record labels, announcing that artists from BMG would join those from Sony , Vivendi and the EMI Group in providing content on its paid download service.

The lone holdout is AOL Time Warner's Warner Music Group but there are rumblings a deal between Pressplay and Warner Music is in the works.

Pressplay, which competes directly with MusicNet, bowed to users' demands in August by adding permanent downloads, unlimited listening and CD-burning capabilities its service.

The subscription-based services were launched by the major labels a year ago with heady plans to offer legitimate alternatives to the rogue file-sharing services like the defunct Napster, Morpheus and KaZaA. However, competing interests and lukewarm responses from music fans have forced the major services to rejigger their business models.

The Seattle-based MusicNet, which is also supported by RealNetworks , Bertelsmann AG (BMG) and EMI Recorded Music, already has licensing deals in place with Universal with Sony and BMG expected to hop aboard in coming weeks.

These deals are seen as clearing the final hurdle in the quest to roll out music download services that can adequately compete for the wallets of music fans willing to pay to listen or download music from the Internet.

MusicNet, which is expected to follow Pressplay's lead and tweak its service to allow portability and ownership of paid downloads, is said to be working on an upgrade to its platform, which is expected to be rolled out in time for Christmas.

The new iteration of MusicNet is expected to include unrestricted access to music from the 'Big Five,' a major concession from the labels on the issue of download ownership. The first hint that the labels would loosen its grip came from EMI Group vice president John Rose who told an online music conference that music industry must consider alternative business models to properly compete the controversial free peer-to-peer services.

In a rare admission that the paid-subscription music download model "appears to be dead," EMI vice president John Rose said, "We cannot build viable business models when competing with 'free.' It is as simple as that. We cannot beat 'free' but we have to work hard to make 'free' less available."

"There is no one-size-fits-all answer. The existing models have the consumers paying 100 percent of the costs. That is clearly not working. We need to diversify and find revenue streams outside of paid subscriptions," Rose said.