Pay-for-Music Web Sites Face Many Hurdles

N E W   Y O R K, June 18, 2001 -- 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.

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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. [ABCNEWS.com has a contractual agreement with RealNetworks and uses Real's products.]