Record Labels, MTV Launch Paid Music Download Service
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The music television network that made it hip to wear tongue-jewelry has jumped on the digital-music bandwagon in a big way, announcing a deal with five major record labels and application service provider RioPort to launch a paid download service.
The landmark deal potentially makes MTVi the front-runner in the lucrative digital-download market. With a ready-made television audience and a network of Web sites to market the new service, it comes as no surprise that five of the biggest record labels have signed on as partners.
The labels -- Sony Music Entertainment, Universal Music Group, BMG Entertainment, EMI and Warner Music Group -- bring a stable of the biggest names in popular music to the service as it looks to create the anti-Napster, a place where musicians can be compensated from legal downloads from the Internet.
The San Jose, CA-based RioPort, which negotiated the deals with the labels, would split a portion of the download money with MTVi, the companies explained in a teleconference with reporters.
"We'll get a cut of the download revenue," said MTVi chief executive Nick Butterworth, who explained that Rio's revenue agreements were negotiated separately with each label and vary in their financial terms.
Butterworth said the paid downloads would eventually be available off links from its 46 radio stations which stream music on the Web. It is the first time that technology has been set up to integrate digital download e-commerce links with streaming media, he said.
For the major labels, it is the second big jump into a space they have largely been avoiding for many years. Last week, AOL Time Warner, Bertelsmann AG and EMI inked a deal with Seattle-based RealNetworks to license music catalogs to the newly-created MusicNet subsidiary.
Under that deal, MusicNet would run the technology to allow third-party Web sites to offer subscription-based music services. RealNetworks and AOL already have specific plans to launch such a service.
Just yesterday, even Microsoft got into the act, launching a beta version of MSN Music, touting the service as a "free, easy way for music consumers to search for, listen to and discover music they like."
To land five of the biggest names in the business for its e-commerce foray is certainly a coup for MTVi, which has a rabid, almost cult-like following for TV shows such as Total Request Live (TRL).
The company, which initiated two rounds of staff cuts to cut down on costs, recently announced ambitious plans to launch MTV360, meshing the company's two main television channels with the Web site.
The plan for MTV360 is to schedule programming on MTV and MTV2 and the MTV.com Site and direct viewers and Web surfers from one location to another. The company believes it can package the three platforms and provide leverage when negotiating advertising deals.