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Rash Of New Deals Drive Digital Music's Evolution
(04/09/01, 3:08 p.m. ET) By Tony Kontzer, InformationWeek
Last week may ultimately be remembered as the beginning of digital music's real evolution.
With a rash of deals large and small sandwiched around Congressional hearings on the topic of digital-music distribution, the industry showed strong indications that it's ready to make it happen. Almost.
"It's a landmark week in which the digital-music landscape has been filled in," said Gartner analyst P.J. McNealy. "We're not quite there yet, but we're getting closer."
A rundown of the week's noteworthy deals, starting with the most recent:
• Yahoo Inc. (stock: YHOO) said it has agreed to market the pending Duet subscription service that Sony Music Entertainment and Vivendi Univeral's Universal Music Group plan to launch this summer. It's somewhat significant for Yahoo in that it represents the struggling portal's first foray into digital music, but it's far short of the Yahoo-branded subscription service many have predicted.
• EMusic.com Inc. (stock: EMUS) revealed that it has signed a non-binding agreement to be acquired by a "major publicly held media company." The fact that the company reportedly was Universal Music Group was perhaps the worst-kept secret in music history, but EMusic execs weren't prepared to confirm the identity of the suitor, and Universal was mum on the deal.
• Fresh off its inclusion in the new MusicNet subscription service, EMI Recorded Music said it's licensing its music library to HitHive, a startup that's working to provide music storage lockers for users of Sprint PCS' MP3 phone. HitHive will let users make their music lockers accessible to up to 25 friends, each of whom can listen to a given song 10 times before being blocked from further playbacks.
• In what may be the most important of the week's deals, MTVi, the Internet arm of cable-TV music-network MTV, said it would begin selling downloads of music from all five major labels by the end of this month on its MTV.com and VH1.com sites. The sites will offer 10,000 songs initially—representing 50 percent of the artists that appear on the MTV and VH1 TV networks.
•As a precursor to a music subscription service it plans to launch this summer, Microsoft's MSN network said it would begin offering a near-CD-quality streamed music service that's similar to Internet radio. The so-called MSN Music offers preprogrammed content in a variety of music genres, but without any ability to copy or choose songs.
• RealNetworks Inc. (stock: RNWK) announced the creation of MusicNet, a standalone company and music subscription service that will feature licensed content from Bertelsmann's BMG Entertainment, EMI, and Warner Music Group. RealNetworks owns 40 percent of the new venture, with the remainder divided among the three labels and MusicNet's employees.
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