RealTime IT News

Pressplay Owner Bets on MusicNet

The big players in the digital music space continued to make multiple bets on paid subscription services, a trend that further signals consolidation among competitors.

A day after Seattle-based MusicNet backer RealNetworks acquired a minority interest in rival Listen.com, reports say Sony Music, which co-owns the Pressplay service, has acquired a 4 percent stake in MusicNet.

The multiple betting is not uncommon in the nascent paid download industry. The big five music labels all have equity interest in the four major digital services -- MusicNet, Pressplay, Listen.com's Rhapsody and FullAudio. In exchange for the licenses to offer legal downloads, the services give up equity, sources say.

It is the cost of those licenses that have been blamed for the financial struggles of the digital music services. On average, the music labels ask for 50 cents per $1 download, a reality that has put the squeeze on the subscription-based services.

With free peer-to-peer alternatives like Kazaa and Morpheus attracting millions of users, the legitimate services have found it tough finding a lucrative market to sell the legal downloads.

It has been a very busy week for digital music firms. First, Roxio announced it would relaunch Napster as a legal service with backing from the labels and America Online lifted the wraps off a revamped MusicNet on AOL service that will allow CD burning capabilities.