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MusicNet Tries to Create an Online Music Market

(click thumbnail)If you've spent much time around college kids lately, you know how seriously they take online access to free music. Used to getting song tracks at no cost in nice little MP3 files, these sophisticated young music lovers hoot at the very idea of ever paying for it.

The free music ethic is pervasive. The hated record companies be damned. So what if they shut down Napster? There's always FastTrack, a peer-to-peer service in Amsterdam that Webnoize, the research firm, says has exceeded the 1.57 million-user peak in Napster's heyday. And, if that goes, well there will always be other places to download free music.

It's against this ingrained mindset that MusicNet, the first of several planned new commercial online music services, has appeared. The venture's marketing campaign refers to music listeners as "consumers," as if to emphasize in no uncertain terms that music must be "consumed" in exchange for money.

The battle line has been drawn in the sand. Get ready for a culture clash that has huge implications for the future of all personalized pay media.


One of the key players trying to straddle that line is Rob Glaser - founder of RealNetworks, the streaming media company - and a key player in creating MusicNet, the first alliance of record labels to offer music online via subscription. MusicNet is a partnership of RealNetworks and mega music rights - holders, EMI Group, Bertelsmann and AOL Time Warner.

On Dec. 4, RealNetworks launched RealOne Music, a new online pay service that rebrands MusicNet. RealOne Music will soon be followed by America Online, which will market the same service under the MusicNet name.

For a fee of $9.95 a month, subscribers can access 100 streams and download 100 songs to their computer's hard drive. At the end of 30 days, those songs - from a catalog of over 100,000 choices - will become unplayable unless the subscription is renewed.

The music can be played only on the computer of the purchaser and only with a proprietary browser incorporating the necessary rights' management technology. Music files cannot be moved to portable MP3 players or burned onto a CD.

Even if a subscriber would want to purchase a music file for permanent use, it's not for sale. A link takes the subscriber to with information on how to acquire the full CD - the only purchase option.


Glaser, perpetually upbeat, is fully aware of the challenges of trying to pioneer a pay service to an audience used to getting music for free. He thinks he can succeed by making the subscription music acquisition process so attractive and hassle-free that music aficionados will gladly pay to avoid the inconveniences now associated with the free services.

"In the case of music, people have a mental model. They think Napster. We have to expose them to a new model that's much more compelling," Glaser said in an interview after the launch of RealOne in New York City.

The streaming media pioneer acknowledged there's a balancing act going on between those who listen to music and those who own the rights. "It's clear that services like Napster worked for consumers, but didn't work for rights-holders. So the rights-holders declared war.

"The legal precedents are pretty clear that any services like Napster are - at a minimum - going to have to be less and less centrally coordinated," Glaser continued. "That's because the judge ruled in the Napster case that you cannot maintain a central directory (of music). As a result, these free services are getting harder and harder to use and much less reliable. I know - I've used them all. It's my job."

This, argued Glaser, opens the way to an appealing, easy-to-use music service. For less than the price of a single CD, users can now explore, for a month, the catalogs of hundreds of artists at many of the top record labels. Downloads will be reliable and of high quality. There are artist guides, discographies, bios and even album art.


Skeptical, I asked Glaser why not let subscribers buy the music files and use them as they please?

"The fact we haven't announced the implementation of how you would own it doesn't mean we won't do that," he responded. "It's putting the pieces together. The logical next step would be to enable purchase of the digital list.

"But the interesting question will be - when you really offer it and it costs, say 99-cents a track - will people really say 'hey, I'm thrilled to pay ten times as much as I'm having to pay for rental to own it,' or will they say, 'I'm glad I have that option, but I think I'll just keep renting it for a while and maybe I'll buy the CD [later].' I don't know the answer to that question. We'll certainly give people an option at some point."

Finally, I asked Glaser - who earlier had expressed personal admiration for Apple's elegant new iPod music player - how the RealOne Music service can succeed by prohibiting the playback of sound files on portable players?

"We need a comprehensive solution for portable players and it's not there yet," he admitted. "It's an issue of the portable devices being compliant with the security system." (Apple and other manufacturers have refused to implement such rights' protection on their portable devices.)

Hang on for the ride, it's going to be an interesting journey, Glaser advises. "My sense is what we have today isn't perfect, but it pushes the ball a huge leap forward."

We'll see if the college kids agree.

Frank Beacham is an independent writer based in New York.