signs licensing pacts with EMI, BMG

By | January 8, 2002 at 12:00 AM

Online music company Tuesday scored licensing deals with two major music labels for its nascent music subscription service, a move that underscored the record industry’s new readiness to cut deals with independent Internet distributors.

The agreements with EMI, a unit of EMI Group Plc and BMG, a unit of Bertelsmann AG, represent a coup for, one of the few remaining independent firms competing with Web services backed by the major music companies themselves. said it expects to soon announce more licensing deals with major labels. launched its service called Rhapsody in early December but its content had been limited to music from independent labels.

Until recently, the major record companies have been slow to license content to services competing with their own platforms, MusicNet and Pressplay.

“’s aim is to build Rhapsody into a service that will eventually offer access to all music,” said Sean Ryan, the company’s president and chief executive officer.

The music industry has begun to feel the heat from a U.S. Department of Justice antitrust probe into MusicNet and Pressplay, analysts have said.


The investigation is aimed at determining if Vivendi Universal and the other major labels – AOL Time Warner Inc.’s Warner Music Group, Sony Corp., BMG and EMI – colluded to set rates and terms for the two competing online ventures, industry executives have said.

“Everybody’s talking to everybody now. All the major labels realized they have to license widely so as not attract anti-trust scrutiny,” said Mark Mooradian, senior analyst with Jupiter Media Metrix.

“It is an interesting time to be an independent online music company in this space,” he said.

Major record companies are also in talks with each other, but the intense rivalry between the two blocs backing the competing online camps has kept either service from providing music from all the big labels.

“FullAudio and Listen don’t come burdened being backed by a major or rival label and are arguably freer to do these deals (with all the labels),” Mooradian said.

Analysts have said that the new online services need music from all the labels to generate the kind of following once commanded by Napster, the phenomenally popular song-swap service that shut down in July.

The big labels won a key court battle against Napster, forcing it to remove all copyrighted songs from its system.

Napster this week is also expected to test a new, industry-sanctioned service.

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