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RioPort in Universal, MTV Music Deals

Ramping up to the August launch of the RioPort platform, Diamond Multimedia subsidiary RioPort Inc. Tuesday inked deals with music industry heavyweights Universal Music Group and MTV Networks.

In the Universal deal, the record label conglomerate will deliver music downloads to RioPort's SDMI-compliant portable flash memory devices.

RioPort will receive content from Universal Music Group's record labels, including Interscope, A&M, Island, Def Jam, Geffen, MCA, Universal, Motown, GRP and Verve. The companies plan to continue efforts to produce compatible digital delivery.

The companies expect Universal content to be available by the winter.

Both RioPort and Universal are supporting InterTrust as a provider of digital rights management technology. InterTrust and Reciprocal will also supply security for the upcoming platform, which includes the RioPort.com site, Rio Audio Manager software and Rio 500 portable playback.

RioPort also teamed up with MTV Networks today in a multi-year secure downloads deal, in which MTV will take a minority stake in RioPort in exchange for content and promotional support.

MTV will get a cut of RioPort's download revenue and RioPort will also build MTV Network's online infrastructure.

MTV Networks online properties include MTV.com, VH1.com, Nick.com, SonicNet, and the soon-to-be-launched music site currently dubbed The Buggles Project.

The two companies expect to have content available during the fourth quarter.

"Our audience demands and expects that we help them download music. RioPort provides us with the opportunity to be able to do so in a secure and easy way that is SDMI compliant," said Fred Seibert, president of MTV Networks Online.

Jupiter Communications Monday projected that digital download revenue from digital will reach "a mere" $147 million by 2003, representing only 5.7 percent of online music sales.

However, downloadable music could drive physical online music sales, which is expected to exceed $2.6 billion by 2003 and recorded sales of $13.7 billion (1.1 percent of all music sales) in 1998.

Jupiter earlier said that digital music distribution would not succeed until consumers overcome security concerns about the technology. The research firm now projects mass market acceptance.