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"With an unparalleled artist roster, a world-class executive team and an ability to maximize numerous opportunities as an AOL Time Warner company," read an official communique, "our goal is to transform WMG into the preeminent music content company of the 21st century."

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Last week's MSNBC report about AOLTW's plans for a cable video channel (hitsdailydouble.com, 3/26)—said to be slated for a 2002 launch—raised more questions than it answered.

Company representatives declined to discuss the plan, perhaps in part because it isn't entirely ready. And you know we're loath to indulge in speculation.

But it's our sworn duty to turn brief, unconfirmed reports into ponderous strings of uninformed guesses.

An all-music video channel modeled on MTV (where AOLTW bigwig Bob Pittman was formerly a player) would not only have to compete with the retooled, web-aggressive version of that pioneering music-video entity (also announced this week) but also establish itself as a TV brand.

Not that such a feat is beyond the online superpower, with its 27 million-plus subscriber base and unparalleled marketing assault. And AOLTW would certainly have a leg up on the competition if it could merge its vaunted AOLTV features (e-mail, instant messaging and chat, among others) with the delivery of music.

According to the MSNBC's report, which was picked up by various other news outlets, "The company hopes fans will watch AOL Music for videos, then subscribe to AOL so they can chat with the band and have exclusive access to downloads, then go to the store to buy the CD."

Will viewers flock to a channel dedicated entirely, or even primarily, to WMG music? So far, only label-agnostic music ventures have shown much staying power, whether online or off--and getting majors to license content to a distribution channel overseen by another major has its own difficulties (see Bertelsmann's Napster).

Then again, if any entertainment company has the wherewithal to generate viewership, it's the "You've Got Mail" folks.

But let's consider, for a moment, the possibility that the forthcoming video channel is largely a 24/7 infomercial for AOLTW music (supplemented, in all likelihood, by an array of outside advertising). When channel viewers go online, for chat, for downloads, for streams, whatever, will their next destination really be a record store? Skeptics think AOLTW's stated agenda may be more of an attempt to quell short-term concerns on the record company side, especially given the news of consolidation in its music operations (see today's related story).

Indeed, sources said there has been some talk at the highest levels that AOLTW could be planning to exclusively offer releases by its major artists for free as added enticements for consumers to subscribe to AOL's online service. Insiders offer that profits could be greater maximized by an increase in subscriber base than by the traditional sale of certain superstar releases, and that fits perfectly into the hard-nosed bottom-line business mentality that AOL has exhibited so far.

"With an unparalleled artist roster, a world-class executive team and an ability to maximize numerous opportunities as an AOL Time Warner company," read an official communique, "our goal is to transform WMG into the preeminent music content company of the 21st century."

With all this media convergence and corporate consolidation, what are we to make of the term "music content company"?

By 2002, it seems fair to assume a whole lot of music fans that log on for tunes will be acquiring music digitally instead of buying physical product. Such a shift in priorities, however disconcerting to folks on the label end, is the prerogative of the owners.

Remember that WMG is the only label group to have been acquired by a media company embracing digital distribution of content as its bread and butter.

Warner Music material—not to mention any other music AOL is able to license—could form the basis for a "premium" online service costing subscribers a few bucks more a month, further spiking the company's subscriber base.

Should this turn out to be the case, it could be a groundbreaking example of big-label music's long-rumored transition from product to service. And while hard goods will continue to be a welcome ancillary revenue stream, doesn't it seem inevitable that music will serve primarily—as it does elsewhere in the economy—as bait on the hook, in this case for AOL subscriptions at 25 clams (or higher) per month?

Subscribers can make use of the Winamp player (now featuring plug-ins for piracy-thwarting Liquid Audio files and DJ-style crossfading, among numerous others), the Aimster instant-messaging-based file-sharing program, the Shoutcast Net-radio application and other AOL-associated goodies to manipulate music.

In other words, log on, get music, share music with your friends—all you can eat, within the secure confines of the walled garden.

In the 21st Century, that sounds a lot more precedent setting than a new video channel.

Marc Pollack minimally contributed to this report.

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