Pay-for-Music Web Sites Face Many Hurdles

For the major record labels, getting Napster out of their hair may turn out to be the easy part.

Having vanquished the upstart file-swapping Web site in court this spring, regaining legal control over their own music, the five biggest record companies — Warner, BMG, EMI, Sony, and Universal — have split into two alliances and plan to launch a pair of subscription-based music enterprises, MusicNet and pressplay, later this summer.

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In so doing, the Big Five would seem to have the inside track toward dominating a lucrative industry sector. But in the unpredictable world of Web music, there are few sure things. The popularity of MusicNet and pressplay remains to be seen.

And apart from the general willingness of Web users to pay for music, the fortunes of the two services will depend in large part on their success in at least three technological areas: Web-site design, reliability, and format.

Designer Labels

Both services are trying to fill the considerable void left by Napster, which was banned by a judge in March from making copyright-protected songs available for downloading, and has since seen an 85 percent decrease in song-trading in recent months. A whopping 360 million songs were swapped on the site in May, down from 2.79 billion in February.

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One way the pay-for-music sites can help develop a large audience is by replicating the simplicity of Napster, which made finding and downloading songs a straightforward task.

"The thing that everybody forgets about is ease of use on the consumer side," says Billy Pidgeon, an analyst at Internet research firm Jupiter Media Metrix in New York. "Is it convenient? So far, it's been easier to use Napster than to buy a CD on the Web."

That, however, will be largely beyond the control of MusicNet, which is not a site but a service licensing its music to other sites. The company is a joint venture combining three major labels — Warner, BMG and EMI — along with Seattle-based Web media leader Real Networks. [ has a contractual agreement with RealNetworks and uses Real's products.]

So far, MusicNet has deals with Internet access king America Online and, yes, Napster, who will both carry its offerings. Napster will thus be responsible for re-designing its own look to incorporate the independent artists it currently features plus MusicNet's subscription offerings. AOL too will come up with its own look and feel for its music section while MusicNet powers the operation from behind the scenes.

Meanwhile, pressplay (formerly known as Duet) combines music from the other two major labels, Sony and Vivendi Universal, the latter of which bought Internet music technology company for more than $300 million this spring. But to this point, pressplay has kept its plans for Web-site design and music format even more closely under wraps than MusicNet.


For a potentially high-volume business like online music, the reliability of the services will also be crucial. But MusicNet's core technology will be very different from Napster's, which essentially allows users on computers to locate and swap MP3 files. As Napster head Hank Barry said earlier this month, his site employs "the architecture of moving things around the edge of the network and sharing with other people … That's not the fundamental architecture of the MusicNet service."

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