frontrunner UMG points to potentially huge migraines down the road. Seagram chief Edgar Bronfman’s recent tirade about online piracy has set an especially confrontational tone for the music group, which has announced that intends to continue its litigation.
MP3.COM POST-SETTLEMENT: TAKING STOCK OF THE SITUATION
After enjoying a substantial bump following the company's landmark settlement agreements with WMG and BMG, MP3.com moved in southerly direction today, closing at 17 (a decline of 8.79%) after a Friday close of 19 3/16.
The deflation is an indicator of lingering concerns about the ability of michael robertson',390,400);">michael robertson',390,400);">Michael Robertson's trailblazing dot-com to make its My.MP3.com service—which will stream the agreed-upon major-label content—profitable enough to justify the $100 million in damages and 1.5 cents-per-stored track/1/3 cent-per-streamed-track royalty rate that came out of the settlement (see story, 6/8).
Robertson has pledged to keep the service free, though recent speeches—including his remarks at last week's EAT'M conference in Las Vegas—have dwelt substantially on the attractiveness of subscription models. But even if MP3.com charges users a monthly fee (like the $9.95 it now asks for a streaming classical-music service), will this be enough to "monetize" the serious bucks the dot-com must fork over to the majors?
More to the point, the lack of an agreement with marketshare-frontrunner UMG points to potentially huge migraines down the road. Seagram chief edgar bronfman',390,400);">edgar bronfman',390,400);">Edgar Bronfman's recent tirade about online piracy has set an especially confrontational tone for the music group, which has announced that intends to continue its litigation against MP3.com.
Additionally, BMG's decision to ink a deal with Net upstart MusicBank for a nearly identical service (which some observers say was reverse-engineered from MP3.com's patented "Beam-It" technology) calls into question Robertson and company's preeminence in the digital music space.
Robertson remains typically upbeat. "We are building an entirely new model to make money from music, and the shareholders of the major music labels are going to benefit from that as well as the shareholders of MP3.com," he told the Wall Street Journal. "I think these are landmark deals." The company has continued forging partnerships and new ventures at a breakneck pace (see today's tech story) and is allegedly testing the waters for a possible deal with Yahoo.
His competitors, however, are eager to point up the risks. MyPlay 's david pakman',390,400);">david pakman',390,400);">David Pakman, for example—whose own recent talks withYahoo were scuttled by earlier partner AOL—told the Journal costs for users of the service would likely skyrocket. Pakman has also publicly fumed that Robertson's company should be punished for what he and the RIAA consider MP3.com's past wrongdoings.
Is this spin putting drag on MP3.com stock, or is the bloom on the post-settlement rose fading for observers in the Street? Only time will tell.
