Digital Downloads Go Legit

Visitors to the Listen.com website will find a headline on the home page: "Your Guide to MP3 and More." MP3 recordings, while a big hit with young music fans, have not been a favorite of the music business. The key to Listen.com's financial future as a download site is likely whatever ends up falling under "and more."

Last week, "and more" clearly became the focus for Listen.com when the company announced that all five major record labels (actually four, with EMI folding into Warner) have invested in their business. The old adage "Keep your friends close and your (potential) enemies closer" may help to explain the recent windfall of investments by BMG Entertainment, EMI Recorded Music, the Universal Music Group, and Warner Music Group, each of which says it has grabbed a stake in the company. Listen.com also disclosed that Maverick Records principals Guy Oseary and Ronnie Dashev have invested in the year-old San Francisco startup, along with Sony Music (who invested last October) and several venture capitalists.

Listen.com's Rob Reid says that "having all five major labels as investors means that Listen.com is now clearly positioned as the platform for discovering digital music. These investments in Listen.com are another significant sign that the entire music industry will be moving aggressively online this year."

Listen.com also announced deals with six independent labels: Koch Entertainment, Mammoth Records, Ministry of Sound, Moonshine Music, TVT Records, and Ubiquity Records, bringing the total number of labels represented by the company to 14. The company has also made deals with nearly every major music-download site, including MP3.com, Emusic, and Liquid Audio, and claims it is now powering music-download searches on several high-traffic sites via syndication deals with Excite, Lycos, RealNetworks, Shockwave.com, Snap.com, Sony, ZDNet, and others.

What does it mean when majors and independents get cozy with the likes of Listen.com while blasting away at others, such as MP3.com (see related story)? BMG's Kevin Conroy says that his company's partnership with Listen.com reflects their desire to support those companies that are working to build a controllable market for digitally delivered music. "Listen.com provides music fans with easy access to legitimate digital downloads," he states. Universal's Larry Kenswil adds that "Universal Music Group views our investment in Listen.com as another building block toward the widespread consumer adoption of digital distribution of music. We believe that Listen's commitment to the creation of a comprehensive guide to legitimate content is a valuable service for the many music consumers in the coming years who will adopt this new medium of distribution."

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