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The BBC's Patrick O'Connell
interviews Paul Glaser, head of RealNetworks and interim CEO of MusicNet
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The BBC's Kevin Anderson
"It definitely has split not only the recording industry but the artists themselves"
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Alon Harnoy,
"If they do not price it cheap, they are going to have a really tough time"
 real 56k

Monday, 2 April, 2001, 20:15 GMT 21:15 UK
Music giants form Napster rival

Three of the world's largest record companies have agreed to join forces to launch a new subscription-based music service on the web.

AOL TimeWarner, Bertelsmann and EMI are backing the new service, called MusicNet, in a venture with RealNetworks, the maker of an internet-based music and video player.

Each company will own a minority stake in MusicNet and their record labels - EMI Recorded Music, BMG Entertainment and Warner Music Group - will licence their music catalogues via the company.

The service should be available later this year.

RealNetworks will use its internet media technology to help launch the service.

Web music

The companies said they would licence the platform to companies that want to sell music subscription services on the web.

The initial partners, AOL and RealNetworks, will determine the cost of the subscription service on their own, said RealNetworks spokesman David Brotherton.

Although the subscription services will be first sold to AOL and RealNetworks, over time companies like Napster could buy it, according to the companies involved.

"We really think of it as a very nice start, but clearly our goal is to expand out from here," said RealNetworks chairman and chief executive Rob Glaser, who will also act as chairman and interim chief executive of MusicNet.

Napster chief executive Hank Barry said in a statement, "We read the announcement with interest and we look forward to learning more about MusicNet."

The music industry has long been at loggerheads with websites, such as Napster, that facilitate the free transfer of music over the web.

Napster lawsuit

Napster has built up a huge list of songs stored on members' computers - its file swapping software allows members to access and download these songs free of charge.

This means, for example, that if a member typed in Madonna, Material Girl, they would get a list of places from where that song could be downloaded in digital format.

The record industry has been battling against it for months, fearing that the rapidly growing popularity of the system will cut the number of CDs sold, and thus their profits.

Most recently, on 6 March, a court order banned Napster from allowing its users to download copyrighted music from other users located using its website and its software.

Napster was given 72 hours from the time it received a list of the songs to ban them.

But since then the record industry has claimed that Napster has not made enough effort to comply with the court order.

In its defence, Napster has argued that the lists of songs provided by the record companies are not accurate enough and do not contain details telling Napster where the songs are listed.

A deal with Napster?

Ironically, Bertelsmann broke from the record-company fold earlier this year to ally itself with Napster.

The media company loaned Napster money and technical expertise.

After the announcement to form MusicNet, Bertelsmann's chief executive Joel Klein said the new subscription service would seek a distribution partnership with Napster.

He added, however, that this would only come when Napster had achieved certain legal and security measures.

MusicNet will also face competition from Duet, a partnership between Sony and French media conglomerate Vivendi Universal.

They have promised to have thousands of songs on the internet for subscription-based download by this summer.

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See also:

02 Apr 01 | New Media
MP3 player sales to soar
26 Feb 01 | Entertainment
Napster blamed for CD singles slump
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Napster ally sets new deadline
23 Feb 01 | Business
Music firms rival Napster
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