Will Web See the 'Celestial Jukebox' for Digital Music?

N E W   Y O R K, June 18, 2001 -- Could a "celestial jukebox" be in the stars?

That's the term music industry observers have given to an Internet site that would, in theory, contain all the music belonging to the five major record labels, as well as a wealth of independent-label music. Such a site would certainly be the leader in the online niche that Webnoize, an Internet entertainment consulting firm in Boston, projects to produce $3 billion in annual revenues by 2003.

But even though the five major labels are planning to launch subscription-based Web services by the end of the summer, they have split into two camps. Warner Music, EMI and BMG (along with Internet technology company RealNetworks) have formed a venture called MusicNet, while Sony and Universal have joined forces on a project once known as Duet but now renamed pressplay.

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And industry observers say the split between the major labels might have to end if any one music site is going to take the place of Napster, the phenomenally popular file-swapping site. In March, a judge ruled that Napster had to stop allowing downloads of copyrighted songs; currently the site features independent artists from well outside the mainstream.

"Music services have to have everything," says Ric Dube, an analyst with Boston-based Internet entertainment consulting firm Webnoize. "All the consumer cares about is that he can go to one store and can get any disc."

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Standoff

That's a step music's Big Five have not yet resolved commercially, although they put up a united front in the legal fight against Napster.

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MusicNet has licensed its offerings to America Online, the leading Internet access provider — and most-visited Web site — in the United States. (AOL Time Warner is the corporate parent of Warner Music.) It has also struck a deal with Napster, which is planning to reconstitute itself as a two-pronged site that will feature a major-label pay-for-play component as well as access to the music of independent artists.

For its part, pressplay has announced a partnership with leading Web portal Yahoo! to provide its offerings to that site's users.

Like others, Billy Pidgeon, an analyst at Internet research firm Jupiter Media Metrix in New York, sees "the quality and the range and the availability of the music" as crucial to the future of pay-for-play Web sites.

And neither MusicNet nor pressplay seem to have a firm advantage over the other in terms of the popularity of their catalogues. The offerings of the two ventures come out nearly even in terms of total U.S. sales, with both controlling about 40 percent of the industry's roughly $14 billion in annual U.S. sales.

MusicNet's biggest stars include Christina Aguilera, Whitney Houston, Madonna, R.E.M., Carlos Santana and Paul Simon. But pressplay has Aerosmith, Destiny's Child, Eminem, Bruce Springsteen and U2.

One-Stop Shopping

The notion of the "celestial jukebox" might not have taken such firm hold if it weren't for the popularity and all-in-one convenience of Napster.

Because of that, music fans might be reluctant to pay for AOL's offerings, for instance, if they have access to only half as many songs as Napster provided.

"They're not going to subscribe unless AOL partners with both MusicNet and pressplay," forecasts Dube.

And while even Napster itself uses MusicNet to rebuild its audience, nobody expects Web users to flock to the new sites they way they once did to Napster, especially now that the lure of free music is gone.

"Napster's still a great name," adds Pidgeon. "But Napster and Real have no illusions about regaining their entire audience."