RealNetworks' e-music bid
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April 2, 2001: 9:52 a.m. ET
Media player software maker confirms launch of online subscription service
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NEW YORK (CNNfn) - Three major music labels will license their music to online audio software provider RealNetworks for use in its planned MusicNet service, the company confirmed Monday.
AOL Time Warner Inc., Bertelsmann AG, EMI Group and RealNetworks (RNWK: Research, Estimates) Inc. announced the joint venture. The music subscription service will combine downloadable and streaming music, employing technology across multiple distribution networks, including RealNetworks and America Online, and will be launched some time later this year. AOL Time Warner (AOL: Research, Estimates) is the parent company of CNNfn.
RealNetworks, EMI, Bertelsmann and AOL Time Warner each will own a minority stake in MusicNet, the company said. The last three companies' music subsidiaries -- EMI Recorded Music, BMG Entertainment and Warner Music Group -- each will license its music to MusicNet separately on a non-exclusive basis. RealNetworks will contribute its Internet media delivery technology.
MusicNet will operate as a stand-alone independent company and will license its "private-label" platform to companies seeking to sell music subscription services under their own brands.
MusicNet's catalog also will include material licensed from other independent and major record labels.
Initially, the company will license its platform to America Online and RealNetworks, each of which plans to launch branded online subscription services later this year. However, it also will license to other distribution outlets, including beleaguered file-swapping service Napster, provided such outlets satisfy legal, copyright and security concerns.
RealNetworks has been trying to negotiate a music licensing deal with most of the big music companies for more than a year. The company's software has not led to widespread piracy over the Internet, making it a more attractive partner to the recording industry than a company such as Napster.
Subscription music services have emerged in the past year as the pre-eminent business model by which music companies can expand online.
MusicNet likely will offer consumers the right to download and listen to varying quantities of music for a fixed monthly fee. The price itself and whether or not the database will incorporate new releases as soon as they are available remains to be determined.
Rob Glaser, chairman and interim CEO of MusicNet, and also chairman and CEO of RealNetworks, said: "The launch of MusicNet will catalyze an exciting new era in digital music distribution. We look forward to working with the entire industry to make music subscription services a reality."
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