On-line music becomes a game for superpowers

As with so many other dreams that seemed attainable a year ago, like the idea that a company could make money by giving away Internet access or selling groceries on-line, the idea that Napster and Mp3.com could revolutionize the music business has also collided with reality. After being bludgeoned by lawsuits, the two digital music companies have fallen into the clutches of the big record labels, with Vivendi agreeing on Saturday to buy Mp3.com – a company it was recently suing – for $372-million.

That means the on-line music game is now controlled by two superpowers: Duet and MusicNet. Mp3.com becomes part of Duet, which is made up of Vivendi’s Universal and Sony Music (Vivendi also bought Emusic.com a month ago), with Yahoo as a delivery partner. MusicNet consists of AOL Time WarnerEMI Group and Bertelsmann’s BMG Music – with Napster as a partner, since BMG owns a stake in the company, and also RealNetworks, which has agreed to provide the software required to use the MusicNet service.

In less than a year, the on-line music industry (if something so new can be called an industry) has gone from being a free-for-all of startups and questionable legality to being a subset of the global record business. Is that going to make things better or worse for music fans? At least in the short term, it’s likely to make things a whole lot worse, and not just for the lawless hordes who got used to downloading with impunity from Napster. In fact, if history is any guide, the record labels could wind up killing the goose before it lays any golden eggs.

One of the ways it could die – or at least become seriously ill – is through sheer boredom. Put it this way: If companies like AOL Time Warner and Universal Music were in charge of the Internet, we would still be typing arcane Unix-style commands and surfing the Web on 9600-baud modems. Despite the fact that the Mp3 format (which made downloading music feasible) has been around for more than four years, the major labels still had to buy Emusic and Napster and Mp3.com just to get in the game.

Why is that? Because rather than seeing downloadable music as an opportunity, the record companies still appear to be motivated primarily by fear: Fear that they will somehow lose control of “their” music, and the massive profits that it generates (for them that is, not the artist – unless the artist happens to be Madonna or Metallica). Fear helped fuel the multimillion-dollar lawsuits against Napster and Mp3.com, lawsuits that softened up the digital music crowd and made them easier to purchase.

And fear is what will probably make the Duet and MusicNet services – whenever they actually arrive – a monumental pain for users. At least there will only be two outlets, which is an improvement on the way things were shaping up, with every record company offering its own competing service. But you will have to pay a monthly fee, and you won’t be able to make a copy of anything (unless you pay a fee, and then only one copy).

You’ll probably get a lower-quality file for the entry-level fee, or it will only be a “streaming” file, and therefore not downloadable. You might be restricted to a certain number of songs downloaded in a certain period, or you might only be able to play them a certain number of times before they “expire” and you have to pay another fee. Not only will the Wild West of Napster be gone, but so will a legal and easy-to-use service such as Emusic, where you could pay $1 and download a song.

Ironically, one of the big roadblocks the record labels are running into involves accusations that they are doing the exact same thing they sued Napster and Mp3.com for: distributing music they don’t own. Music publishers say both MusicNet and Duet are planning to let consumers download songs even though they haven’t paid for the right to do that (the record companies say downloading and/or streaming should be covered under existing deals, but some publishers argue they deserve a separate fee).

In response, both the record companies and some digital music players such as Mp3.com have been proposing – in hearings being held by a U.S. government subcommittee looking at the issue of digital music – that copyright legislation should be changed so that Internet distribution of music can function the same way that radio broadcasting does, with a blanket license that gets paid out to artists and their representatives.

Even if that happens (which isn’t likely), the two superpowers will still control access to something like 90 per cent of the recorded music available for download. If you like the kind of service that comes from a market where two global conglomerates control the supply, then you’re going to love the Internet music business.

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