At Plug.In, Glaser, Bronfman Jr. Offer Sweet Music

RealNetworks Inc. Chairman and Chief Executive Officer Rob Glaser kicked
off Tuesday’s festivities at Jupiter Media Metrix’s Plug.In conference in
fine fashion with a demonstration of the much-talked-about MusicNet
subscription service. Glaser spent a few uncomfortable moments trying to log
in to the MusicNet interface, but quickly switched gears while a technical
glitch was corrected to show off one of his two news announcements of the

This came in the form of streaming a Dave Matthews Band track through a
Nokia Communicator 9210 phone, courtesy of Glaser’s firm’s RealPlayer
software application — a truly nifty trick while someone straightened out
MusicNet. Glaser gave the brief demonstration, explaining that is what the
capability of a GPRS-enabled phone can bring to the user — faster playback
at lower bit rates. But it was a mean tease because it’s not really feasible
in the U.S. the way it is in Europe — a fact he pointed out specifically
for those who he said may have “device-envy.” Glaser underscored this when
he announced that Virgin Radio, BMG Entertainment, Kirch New Media, TF1,
Darker Than Blue, Aestheticom and — all Europe-based
outfits — would be the first partners to supply content for the advanced,
Web-enabled handset.

Glaser also briefly noted that MusicNet, which he skippers until a more
permanent CEO can be named, hooked independent music group Zomba as a music
affiliate to accompany AOL Time Warner, EMI plc. and Bertelsmann AG as
partners. From there, Glaser segued smoothly into the MusicNet demo (this he
prefaced with a quick comment about the glitch being the reason why it isn’t
on the market yet), on which he called up a Britney Spears tune. This was
fitting, as Zomba owns the rights to the young diva’s music. The interface
was nice enough and not all that much of a stretch from Napster with its
artist search, and artist and track list capabilities, but Glaser pointed
out that a key difference is MusicNet is not only a platform from which
tunes may be downloaded, but one from which songs may be streamed before
they are purchased.

“We’ve set out, in the last year and a half to two years, to create this as
an integrated ecosystem,” Glaser said.

In any case, think of MusicNet as an online version of Virgin Megastore,
where scads of music lovers line up each day to listen to music before they
make purchasing choices.

Ah, purchasing choices. The big blank to date for both MusicNet and
pressplay is that each firm has been cagey about pricing, and that hole
remained a large goose egg Tuesday despite the gregarious presentations of
Glaser and Edgar Bronfman Jr., executive vice chairman of media powerhouse
Vivendi Universal.

But it was clear from Glaser’s answers to questions by Jupiter’s President and
Vice Chairman Gene DeRose that speed to market is not what is important —
quality of product is.

“We want to have a product in place that works for consumers and is legal,”
Glaser said. “…As opposed to the scattering of Gnutella, Napster clones,
and offshore drilling facilities.” (the latter was, of course, a joke; a
poke at how widespread file-sharing has become in the last year.)

Glaser also noted that CD burning, portability, and other peripheral matters
were all important issues, but said it was important to get “the ball
rolling” and that MusicNet could be polished down the road. When pressed by
DeRose, Glaser said moving MusicNet services to wireless devices (such as
personal digital assistants or the Nokia Communicator) could be five to seven
years down the road. Moreover, he was confident that 3G services will also
be rolling out en masse in the next five years or so. He also encouraged and
“welcomed” competition from pressplay. The skipper said that the
arrival of MusicNet does not mean RealNetworks will be any less attentive to
video and that “audio begets video.”

Indeed. Speaking of begetting, Glaser’s keynote gave way to Bronfman Jr.’s
who proved just how much of a polished speaker he was by lacing his answers
to DeRose’s questions with corrections to some of Glaser’s statements (i.e.,
Glaser had said that HBO and Showtime started out as independents; in
recommending that Glaser check the history, Bronfman Jr. said they had tried
to roll out in previous incarnations, but were prevented by the U.S. Justice
Department. So goes the advantage of speaking directly after your rival.)

Bronfman Jr. strongly disagreed that MusicNet’s strength will be the
independence of its business schema. He said the fact that MusicNet is
60-percent owned by three companies and that pressplay is owned 100 percent
by two companies makes no difference in the competitive scheme of things.
Bronfman Jr. also strongly disagreed with MusicNet’s approach to allow
retailers under MusicNet’s wing the ability to price music. pressplay will
have a more centralized pricing model, emphasizing commissions based on
affiliates’ sales.

Bronfman Jr. didn’t have much specific to reveal to the public, but then
again Universal has pretty much used its mergers & acquisitions of the
last year speak for itself. Bronfman Jr. wasn’t kidding, moderator DeRose
pointed out, when he claimed Universal would move aggressively in the online
music realm (in some form or another, Universal bagged,, EMusic and Bronfman Jr. did say it was not entirely
out of the realm of possibility that all of the record labels’ catalogs will
eventually be available on both MusicNet and pressplay, but that
probably wouldn’t happen until a year or so from now. This makes sense; the
rivals will feel each other out for a while and work the kinks out before
such matters as sharing catalogs and inking licensing deals with each
others’ partners is tenable.

In summation, what Glaser and Bronfman Jr. both seemed to agree on was the
fact that advertising will not drive either MusicNet or pressplay (thus
neither service’s backers will spend millions of dollars marketing them in
the early going), and that the consumer does not care about the labels or
technology, but the artists, and so will ultimately dictate how these
services are received.

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