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"The fact that this will launch without the ability to transfer to portable devices ensures this will not be widely accepted at launch."
——analyst Mark Mooradian

MUSICNET PROVIDES PLATFORM TO DISTRIBUTION PARTNERS

Online Music Service Prepares For Launch, Whether Consumers Like It Or Not

MusicNet, the online music venture by RealNetworks, AOL Time Warner, EMI, Bertelsmann and Zomba Records, Thursday delivered its technology platform to its distribution partners.

RealNetworks said it plans to launch the service within 60 days, though AOL has only said it would launch this fall. Subscribers at launch would be able to choose from about 100,000 tracks from the four labels. MusicNet has suggested a price of $10 per month for 50 downloads and 50 streams of music, but the distributors will ultimately set their own prices and bundle of features.

Analysts, however, are skeptical about how successful new commercial services such as MusicNet and the upcoming Pressplay service will be received by consumers accustomed to downloading music for free on such services as Napster.

"Free and unlimited is a difficult thing to compete with, however I think we are offering things that consumers will like," said MusicNet's strategic advisor Richard Wolpert. "We’re starting with puppy dogs and candy!"

Also hindering its chances of user acceptance is the service’s inability to "burn" or copy music from PCs onto portable devices. Wolpert says he hopes to resolve the issue within two to five months after launch. Starting the service without this capability, however, may hinder its reception by consumers.

"The fact that this will launch without the ability to transfer to portable devices ensures this will not be widely accepted at launch," said Mark Mooradian, analyst with Jupiter Media Metrix. "Not that I’m going out on a limb to do so. It’s pretty obvious, right?"

"I think it (MusicNet) will be a great way to sample, but the lack of portability will drive people to buy CDs," said GartnerG2 analyst P.J. McNealy. "You're asking people to pay $120 a year for this subscription on top of the $90 the average consumer annually spends buying CDs and in addition to paying a fee for Pressplay. Not to mention the hundreds of dollars they’re already spending on porn. I mean, seriously, that’s a lot of dough."

However, Vivendi Universal and Sony Music’s Pressplay—which was recently postponed in favor of a fourth quarter launch on MSN, Yahoo and MP3.com—has said it should offers subscribers the capability to transfer onto devices within a short period after launch.

"One arguable advantage for Pressplay is that it will have portability to devices, assuming it launches," said Mooradian. "In fact, I’m taking bets on when it will finally launch. Want in?"

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