RealTime IT News

Cranking It Up In the Music Space

The volume has been cranked up in the Internet music space recently and some of the action is even being taken into the real world as Loudeye inked a deal with Fullplay Media Systems to let bricks-and-mortar merchants offer in-store sampling of 3 million songs from more than 250,000 CDs.

Elsewhere, Pressplay and MusicNet both signed deals that give the online music companies licenses to distribute content from all five major labels.

Last week, Pressplay, a joint venture between Sony Music Entertainment and Universal Music Group (a unit of Vivendi Universal), signed a non-exclusive agreement with Warner Music Group, making it the fifth major label providing content to that streaming service.

Monday MusicNet, the first of the record-label-backed online music services and a joint venture by RealNetworks and three of the Big Five record labels -- AOL Time Warner, Bertelsmann and EMI Group -- signed a deal to add the catalogs of Sony Music Entertainment and Universal Music Group to its offerings.

MusicNet is poised to re-launch next month with an expanded catalog and new features.

AOL is said to be planning to incorporate the new MusicNet service into its AOL Music next month. And RealNetworks will introduce it to RealOne Music subscribers.

MusicNet is pulling even with its rival, Pressplay, allowing subscribers by year-end to burn CDs and transfer music from all five major recording companies to portable devices. In August Pressplay updated its service and began offering consumers unlimited music streaming and downloading and the ability to pick and choose tracks to buy on demand and burn to a CD for prices that start at about $10 a month.

Meanwhile, EMI Recorded Music says it has signed "the most liberal digital distribution deal of any of the five major recording labels," granting nine online music services, including Listen.com's Rhapsody (which competes with MusicNet and Pressplay) the right to sell digital singles to consumers as soon as they debut on radio -- typically weeks before an album's retail release.

EMI said it is giving subscribers the freedom to take their music with them, either by burning favorite tracks onto a CD or transferring them as many times as they like to portable music players

Why all the activity in this space?

One reason may be that the Recording Industry Association of America has reported that CD shipments to retailers for the first half of the year are down 6 percent. And a recent report from comScore Media Metrix, found that CDs sold online have declined even more sharply -- 25 percent from last year, in what some companies may consider a harbinger of retail sales to come.

Clearly the business is moving forward to make legitimate download services available so that consumers can have their music they way they want it - portable and on their own terms.

"Legitimate online music consumption is about to explode," Larry Kenswil, president of Universal's eLabs, told the Associated Press recently. "Universal Music Group is supporting as many legitimate online music services as possible."

The Loudeye and Fullplay deal (financial terms were not disclosed) means that the music samples will be offered via the Internet as part of Bellevue, Wash.-based Fullplay's Interactive Merchandising Systems product, which includes media preview stations that are mountable on walls, racks, or end caps, allowing retailers to place multiple stations throughout a real-world store.

Joel McConaughy, Loudeye's chief technology officer, said that "music samples have proven to be a key driver of CD sales for the major online retailers" and Fullplay's IMS extends that reach directly to the point-of-sale."

Amazon.com recently signed a deal with Seattle-based Loudeye to provide hosted music samples across its retail site and in its music store using the Loudeye Samples Service. Loudeye says it has relationships with all five major record labels and hundreds of independent labels.

As for the music services, Pressplay and MusicNet "appear poised to offer a good service at a good cost," Lee Black, a senior analyst for Jupiter Research, was quoted as saying. He also said the two businesses are long-term commitments and don't need to show overnight success similar to Napster, Kazaa, Morpheus and other software services that offered limitless unauthorized file-sharing.