Quantcast
It seems likely that some kind of industry-friendly version of Napster will be launched—perhaps even in the late summer. What remains to be seen is whether a substantial number of users will want to pay for it.

HOLES IN THE MUSICNET?

Insiders Wonder Whether The Licensing Group’s Pact With Napster Will Click
What’s the forecast for Napster’s deal with MusicNet? If the conference call on June 5 with Napster chief Hank Barry and MusicNet/RealNetworks head Rob Glaser was any indication, it’s mighty hazy.

The two online chieftains proclaimed that the participating labels in the MusicNet alliance—BMG, Warner Music Group and EMI—would license content to a copyright-friendly, paid version of the notorious online music service. Despite the triumphal tone of the deal announcement, it was clear all was not joyful in MusicNet-land. WMG and EMI restricted their comments to demanding that Napster stop violating copyright entirely and launch a new, secure service before they would license any content to it.

EMI head Ken Berry’s internal memo, which just happened to coincide with the splashy MusicNet announcement, flatly insisted that the U.K.-based music company would not proceed with such a deal until Napster was "no longer active in distributing illegal files and when they have successfully developed technology that will accurately track the identity of files distributed on the service. At this point, Napster is unable to meet these requirements."

This negative slant was similar to the language in the MusicNet-Napster announcement, which promised just such a reformed version of the service.

BMG’s lack of similar criticism was attributable to the role played by parent company Bertelsmann, which stepped in as a Napster investor last Halloween and has long trumpeted its intention to help the online file-swapping service go legit.

The discord among the label groups became even more apparent as word leaked of dissatisfaction with Glaser’s leadership. RealNetworks, which has promised a Real technology component for the new service, controls 40% of MusicNet to the labels’ 20% apiece. Glaser’s supposedly unilateral action in the Napster deal has reportedly given impetus to a search for a new, unbiased leader and the establishment of a board of directors for MusicNet.

Further doubt swirls around the value of a neutered Napster. The swappery’s peer-to-peer service is virtually non-functional, and its once-massive constituency has scattered to other underground file-sharing communities. Search for just about anything on Napster now and you’ll likely get the reply, "no files found."

Although BMG, along with the rest of the major groups, continues to press the collective lawsuit against the netco, Bertie appears to be the driving force behind the Napster deal. The other labels in the MusicNet coalition, meanwhile, seem wary at best and may feel pushed by Bertelsmann’s online agenda.

Barry told the press that under the terms of the agreement, Napster would be unable to license content directly from rival consortium pressplay (formerly Duet)—a partnership of marketshare leaders Vivendi Universal and Sony. Instead, any negotiation for Duet content would be conducted by MusicNet.

It seems likely that some kind of industry-friendly version of Napster will be launched—perhaps even in the late summer, as Barry and Glaser promised during the conference call. What remains to be seen is whether a substantial number of users will want to pay for it.

While the two techmeisters underscored the value of Napster as a brand, one insider notes that said brand has been "completely diluted" in the wake of court-ordered restrictions.

In its eagerness to satisfy rights-holders, the swapco has re-imagined itself as a subscription service featuring relatively low sound quality and severe restrictions on what subscribers could do, with rights-holders in control of the rate at which content would be distributed. Music would be "tethered" to users’ PCs and couldn’t be burned to CD or transferred to portable devices.

If Barry’s comments to the press were any indication, the peer-to-peer element of Napster (which allows for the flow of music files between users) would be restricted to independent and unsigned music and any other material explicitly earmarked for that purpose. Users who upgraded to the version with licensed major-label content would be subject to the limitations listed above.

Would the name value of Napster be sufficient to drive subscription sales for such a restrictive model, which more closely resembles failed online models of the past than the massively popular, free swapping-spree that Napster once was?

Another wild card is the possible impact of MusicNet’s position as licensor of pressplay content. What if UMG and Sony—notorious sticklers about controlling the conditions for online distribution of their material—can’t be wooed? And then there’s the as yet unresolved matter of negotiating licensing rates with music publishers.

In any event, a deal with tech company Loudeye was cut last week to provide Napster the means to identify tracks within the system and, ideally, track their legitimacy. The swappery also announced the hiring of former Department of Justice attorney Jonathan Schwartz as General Counsel.

In related news, the European Commission has opened investigations into pressplay and MusicNet. Mario Monti, the EU’s Competition Commissioner, revealed Monday (6/11) that "these are important cases for the development of music services offered online to consumers, and there are potentially a number of issues which merit close examination."

The EC will investigate whether the deals involved anti-competitive agreements between the companies. "The music market is highly concentrated, so any cooperation between the five majors is regarded as potentially worrying," a spokeswoman said. "We acknowledge that the industry has to have a chance to adapt to new technology but want to ensure this is not at the expense of consumers’ interests."

It’ll be interesting to see what this brave new world looks like once the dust has finally settled.

Marc Pollack contributed to this report.

UMG BROADENS SPOTIFY OFFERINGS
Sir Lucian and Daniel are in harmony. (3/28a)
THE COUNT: COLDPLAY IS HOT, COUNTRY'S COOKIN' IN THE U.K.
The latest tidbits from the bustling live sector (3/28a)
YTD MARKET SHARE
Zeroing in on the elite teams (3/28a)
TRUST IN THE TOP 20
Hip-hop is no longer hibernating. (3/28a)
SONG REVENUE:
A STYLISTIC STEW
MC, divas and singer-songwriters rub elbows. (3/28a)
THE NEW UMG
Gosh, we hope there are more press releases.
TIKTOK BANNED!
Unless the Senate manages to make this whole thing go away, that is.
THE NEW HUGE COUNTRY ACT
No, not that one.
TRUMP'S CAMPAIGN PLAYLIST
Now 100% unlicensed!
 Email

 First Name

 Last Name

 Company

 Country
CAPTCHA code
Captcha: (type the characters above)