BMG to make Top Hits Available Online

The age of downloadable digital music is showing signs of maturing. Territory that was explored by hobbyists, pirates, and startup companies eager to stake their claims will soon yield to the irresistible force of multinational conglomerates.

On April 6, BMG Entertainment announced a sweeping plan to offer its enormous catalog of artists and performers over the Internet this summer "through an open network of retail partners." Bertelsmann Music Group, with more than 200 record labels under its umbrella, including RCA, Windham Hill, and Arista, has long operated one of the biggest and most successful music clubs, and has experimented with offering promotional and test recordings over the Net.

The move into full-scale secure downloading by one of the music industry's "big five" heralds a new era in the distribution of music. "This is the biggest commitment a big five record label has made to downloads, especially in terms of offering their most popular, most lucrative content," commented International Data Corporation analyst Malcolm Maclachlan. "BMG has been preparing for this for a while. It will be interesting to see if the solutions they come up with will work without being too cumbersome and confusing to consumers."

"BMG strongly believes that the retail channel will be a critical element to connecting our artists with their fans in the electronic distribution environment," said Pete Jones, president and CEO of BMG Distribution and BMG Associated Labels. To date, the downloadable music phenomenon has been dominated by the relatively low-resolution—and low-security—MP3 format. User-friendly Napster, which enables the easy sharing of music recordings, is another recent thorn in the side of the music industry. BMG intends to counter the free-music movement with its own authorized formats.

"What we're offering is an effective alternative to the existing marketplace, which is largely pirated music," said Kevin Conroy, BMG's senior vice president for marketing and new technology. "We're offering an alternative that works and will build what we believe will be a very significant market for digital downloading."

Beginning this summer, downloads of hit singles by BMG artists will be offered through individual labels' websites as well as through affiliated retailers, Conroy stated. The program will be expanded as the year wears on, with full albums to be offered by the winter holiday season. Other major music companies—notably Universal Music and Sony—have made moves recently to offer their wares over the Internet. Sony has announced a plan to launch its own downloadable music operation, to be known as Label Gate Company.

BMG has signed deals for digital-rights management with several competing companies, in effect spreading the risk and responsibility among all of them. Partners include IBM, Microsoft's Windows Media Technologies, Silicon Valley's InterTrust Technologies Corp., Reciprocal, Digital World Services, and Liquid Audio, which will work to ensure compatibility among competing formats. (See related item for technical details.) What BMG has done "is focus on creating a competitive marketplace," commented Liquid Audio vice president Andrea Fleming, "without handing the keys to the kingdom to any one digital download company."

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