Pressplay Gets BMG; MusicNet Next

Sony/Universal-backed digital music service Pressplay has snagged a licensing deal
with BMG, the fourth of the ‘Big Five’ record labels to put its artists on
the paid download service, a move that is expected to be mirrored by rival,
AOL-backed MusicNet.

The New York-based Pressplay got the first jump in the race to win support from
all the major record labels, announcing that artists from BMG would join those from
Sony , Vivendi and the EMI Group in providing content
on its paid download service.

The lone holdout is AOL Time Warner’s Warner Music Group
but there are rumblings a deal between Pressplay and Warner Music is in the

Pressplay, which competes directly with MusicNet, bowed to users’
in August by adding permanent downloads, unlimited listening and
CD-burning capabilities its service.

The subscription-based services were launched by the major labels a year ago
with heady plans to offer legitimate alternatives to the rogue file-sharing
services like the defunct Napster, Morpheus and KaZaA. However, competing
interests and lukewarm responses from music fans have forced the major
services to rejigger their business models.

The Seattle-based MusicNet, which is also supported by RealNetworks , Bertelsmann AG (BMG) and EMI Recorded Music, already has
licensing deals in place with Universal with Sony and BMG expected to hop
aboard in coming weeks.

These deals are seen as clearing the final hurdle in the quest to roll out
music download services that can adequately compete for the wallets of music
fans willing to pay to listen or download music from the Internet.

MusicNet, which is expected to follow Pressplay’s lead and tweak its service
to allow portability and ownership of paid downloads, is said to be working
on an upgrade to its platform, which is expected to be rolled out in time
for Christmas.

The new iteration of MusicNet is expected to include unrestricted access to
music from the ‘Big Five,’ a major concession from the labels on the issue
of download ownership. The first hint that the labels would loosen its grip
came from EMI Group vice president John Rose who told an online music
conference that music industry must consider alternative business models to
properly compete the controversial free peer-to-peer services.

In a rare admission that the paid-subscription music download model “appears
to be dead,” EMI vice president John Rose said, “We cannot build viable
business models when competing with ‘free.’ It is as simple as that. We
cannot beat ‘free’ but we have to work hard to make ‘free’ less available.”

“There is no one-size-fits-all answer. The existing models have the
consumers paying 100 percent of the costs. That is clearly not working. We
need to diversify and find revenue streams outside of paid subscriptions,”
Rose said.

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