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To: 10K a day who wrote (122674)	4/3/2001 9:23:00 AM
From: H James Morris	Respond to of 164684

>I would think a Microsoft would be droooling (all over themselves) with 27 billion in cash. I haven't followed Rnwk for quite some time. What do they have that Msft doesn't? I just don't know. It does look interesting though. >A legal Napster? Seattle-based RealNetworks yesterday said it's working with three of the world's largest record labels to create MusicNet, a subscription service that would allow consumers to purchase copyright-protected music online. AOL Time Warner, which owns Warner Music Group; Bertelsmann, owner of BMG; EMI; and RealNetworks all own a minority stake in MusicNet. It will be a stand-alone company selling private-label copies of its platform to portals and other sites. AOL and RealNetworks are the first customers. Each plans to offer its own music-subscription service later this year. The deal is a coup for RealNetworks, which has been searching for profitable ways to offer content online. Last year, it launched Gold Pass, a cable-style subscription service that charges users for access to special video and music. RealNetworks Chief Executive Rob Glaser, who is chairman and acting CEO of MusicNet, said the deal was prompted in part by a February appeals-court ruling that ordered Napster to block access to illegally copied music. "We saw an intensification of interest on the part of the music companies to go beyond what they've done before, which were trials and promotions, to really do something deep and serious," Glaser said. Napster has been a thorn in the music industry's side since a 19-year-old college dropout created the service. Napster allows users to swap computer files of music many have converted from CD collections. AOL Time Warner, EMI and Bertelsmann were among the large record labels that targeted Napster in a copyright-infringement lawsuit last year, arguing that the wildly popular service potentially would cost them billions in lost sales. A U.S. District Court judge in California in July ordered Napster to block access to illegally copied music. Glaser said MusicNet hopes to license the platform to various players, including Microsoft and Napster. RealNetworks is engaged in a battle with Microsoft for the market for online media-streaming software. While analysts said MusicNet carries huge potential, some expressed concern over the absence of the two other major record companies, Sony and Vivendi Universal, which recently formed their own online venture, Duet. "What they (MusicNet) need to do is sign up the other two major record labels to have an impact in the market," said analyst David Bench of New York-based Arnhold & S. Bleichroeder. "People are going to want to have one-stop shopping. They want to find all their music at one place." Larry Jacobson, RealNetworks president and chief operating officer, said yesterday's deal should be the first of many. "You can only imagine how hard it was to get three labels all to agree on the same document," he said. "You have to start somewhere. We feel like we're on to a raging start, and it's going to get the attention of both major independent music labels." Many of the details surrounding the deal are unclear. It came a day before record-label executives were to meet in Washington, D.C., for a Senate hearing on online entertainment. Glaser said more details will be revealed soon, including how much companies will charge for the service. "I think it definitely has potential to be significant if the platform gains momentum," said Robert Fagin, an analyst for Bear Stearns in New York. "Building that community is really the key."