MusicNet Looks to “Press Play” First

After months of anticipation, questions and debates about the future of online music distribution, Seattle-based MusicNet — the platform developed and backed
by AOL Time Warner, RealNetworks Inc., Bertelsmann AG, and EMI Recorded Music — beat rival pressplay to the finish line Thursday when it
began distributing its platform to partners.

The platform was shipped to AOL and RealNetworks after months of being tinkered with and tested. MusicNet will feature music content from BMG, EMI, Warner Music Group and Zomba. Its business model is simple enough; with the backing of all the labels, it will
license it platform to companies who desire to sell music subscription services under their own brands.

And while an actual figure hasn’t been set yet, MusicNet has reportedly recommended that partners charge in the vicinity of $10 to $15 per month for a set number of streams or downloads. Still, this may not be enough to hook users; MusicNet has been criticized by some analysts because, unlike pressplay, it lacks the ability to allow users to make their music portable.

Ric Dube, analyst for Boston-based research firm Webnoize, conducted a survey of about 4,000 U.S. college-age consumers to gauge their interest in pay-to-play subscription services. Of little surprise, perhaps, is that 62 percent of respondents said they would go to online Napster alternatives (think Morpheus, Gnutella, et al) rather than pay. However, some said they would pay to play.

“More than 40% of survey respondents said they would pay at least $10 monthly for an online music service,” Dube wrote. “The majority of respondents — more than 60% — said that total choice and portability could make or break their decision to buy.”

Dube’s also contended that in order for the MusicNet’s and pressplays to succeed, they would have to build on the “free alternatives” that users have been flocking to. Additional programming and ubiquitous access could help spark consumer interest.

As previously reported, MusicNet will offer both streaming and downloading of content and includes secure, digital rights management
functionality courtesy of RealNetworks’ RealSystem Media Commerce Suite. The infrastructure includes security features, peer-to-peer
file sharing, reporting capabilities for e-commerce, account and copyright management, customer service support and search tools.
RealNetworks could start delivering content via MusicNet as soon as two months.

While the actual service won’t roll out for the
public’s listening pleasure just yet, MusicNet said it would give the public a taste via a
limited preview. By limited, the outfit means a private test will be offered to 500 users for one month beginning Oct. 5.

Interestingly, MusicNet’s news comes a couple of days after pressplay said it would not be ready to go until later this fall.
pressplay was slated to roll out this month, but the joint venture between Universal Music Group and Sony Music Entertainment said
it would delay launch out of deference for the attacks on the World Trade Center in New York and the Pentagon near Washington.
pressplay’s distribution partners include Microsoft Corp.’s MSN network, Uniersal’s
and Yahoo Inc.

The distribution of MusicNet comes at an interesting time in the digital music industry as the impetus behind them, the equally
loved and maligned Napster Inc., announced this week that it has settled a more than two-year-old lawsuit with music publishers.

Napster, which is backed by Bertelsmann AG and is working on its own version of a pay-for-play service, agreed
to pay $26 million to the publishers, and another $10 million as an advance on future licensing fees. But analysts who look even
farther back say it cost more than $36 million to keep Napster operational because Bertelsmann had already shelled out roughly $70
million to keep the wildly popular service afloat throughout the numerous, contentious lawsuits.

Napster, incidentally, joined MusicNet as an
affiliate in June.

News Around the Web