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Digital Music Industry Shrugs Shoulders at First Day of Plug.In

As is typical with first days of summits, Monday at Jupiter Media Metrix's sixth annual Plug.In digital music festival at the Sheraton Hotel and Towers in New York City went by with nary a whimper, but according to some sources, Tuesday promises to be a different story.

Reuters squeezed out of Napster Inc. sources that Hank Barry will finally cede his CEO throne and will name former Bertelsmann AG executive Konrad Hilbers as the file-swapping firm's new skipper when he takes the podium as the 12:15 p.m. keynote speaker.

But there was nothing earth-shattering to be gleaned Monday. There was a morning panel loaded with record label and technology firm reps such as TVT Record's Founder Steve Gottlieb who seemed to make it a point to anger Liquid Audio's CEO Gerry Kearby by implying that his business was illegitimate and that he didn't want his business tied to third-party Internet plays such as the music download firm. This prompted an irate Kearby to ask Gottlieb why he asked for an advance. Of course, there were casual jokes made by Ted Cohen, vice president of new media at EMI Recorded Music, to Aimster CEO Johnny Deep about who was suing who, but other than that any animosity was kept to a bare minimum even if it was roiling under the surface.

While bickering among label guys and pioneering techies may be commonplace these days in the wake of Napster, it's true that one important party typically gets shut out in all of the discussions. And that is what is great about such summits as Plug.In, really. Canadian-born pop star Alanis Morissette followed the "label/techie panel" with a broad-sweeping speech about changes in the music industry. She spoke well over the course of her 20-minute "Artist's Perspective" speech and rattled off such depressing statistics as "less than one-third of one percent of artists today receive enough royalties to make a living." She also repeatedly (and justly) thanked the industry and fans for the fact that, as a multi-platinum-selling star of pretty much international proportions, she got a break. That her speech was modest was gratifying, but it was really more of the presidential variety, pointing out the goods and the bads without actually suggesting what anyone does about them. Morissette did acknowledge that the current business model the Big 5 employs will not work on the Web in favor of artists. She also made a point to ask fellow artists to join her in becoming educated about how music is being distributed on the Web.

This was a perfect segue for the next panel, "Artists, Labels and Management Collide: Who's in Control?" Who indeed? Jenny Toomey, executive director for the Center for the Future of Music and Ann Chaitovitz, director of sound recordings for artists' rights organization AFTRA both expressed concern about the current "big label buys small digital music start-up climate," which they feared would not work for artists trying to break free.

Toomey wondered if Vivendi Universal's purchase of MP3.com will change what the pioneering music firm might do for up-and-coming artists now that "it has been folded into the machine."

Jonathan Zavin, a partner at Richards & O'Neil and a long-time defender of record labels sprang to the Big 5's defense, praising them for their marketing and their ability to help bands saturate the public's collective mind.

But there would be no definitive statements about the music industry looking forward made Monday. After all, the Big 5's pressplay and MusicNet have yet to launch; in fact that most interesting comments made about these two (yes, Toomey and Chaitovitz expressed concern that these new entities would not be artist-friendly) came from Jupiter's most ubiquitous digital music analyst Aram Sinnreich, who expressed doubt that pressplay and MusicNet would both roll out on time (they're due before summer's end), and worse, that they would work. Sinnreich based his observations on the fact that the average music consumer does not even spend $10 a month on music, which is what many analysts have speculated online music subscription firms would charge. However, this should not depress anyone. Jupiter claims online music sales will break $6.2 billion by 2006; in fact, 32 percent of audiophiles will procure their tunes online.

There were some absolutes though; CenterSpan, which bills itself as the legal answer to Napster, unveiled its C-Star digital music platform. It's wrapped in Microsoft Corp.'s digital rights management technology (DRM) and, unlike Gnutella in all of its decentralized server glory, C-Star "mediates" the peer-to-peer activities of its user. Basically, it chooses for the audiophile which file that person is going to hear, providing what CenterSpan hopes will be a safer medium for file-sharing. Basically, no files get traded without clearance and proper compensation. CenterSpan's approach appears to be cost-effective as C-Star is one-ninth the cost of streaming and 1/3 the cost of central server-based systems.

Also of note Monday, Musicmatch launched Radio MX digital music subscription service, the industry's first near music-on-demand service with customizable radio and professionally programmed stations -- all layered with the company's personalization technology.

Tuesday promises to be more exciting with RealNetworks Inc.'s Chairman and CEO Rob Glaser slated to kick off the keynote at 9 a.m. sharp, followed by Vivendi Universal's Vice Chairman Edgar Bronfman Jr., and Barry and Bertelsmann eCommerce Group's President and CEO Andreas Schmidt in the afternoon.