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Warner Music, Echo Networks in licensing deal

Warner Music Group, home to such stars as Staind and Madonna, Monday said it licensed its music to Echo Networks, marking the first of several such deals the recording giant expects to reach with Web subscription services beside MusicNet, which it partly owns.

“I would expect there will be more deals within the next month or two,” said Paul Vidich, executive vice president for Warner Music Group. “We’re talking to four other companies which want to enter the space of online subscription services, similar to the ones Echo and Musicnet offer,” he said.

Privately held Echo plans to offer streams and downloads of Warner Music recordings through a subscription service in the first quarter of 2002. It will also offer the music through services it develops for third parties.

Since popular song-swap service Napster was idled by a copyright infringement suit by the music firms, services like MusicNet and PressPlay have been put together by major labels like AOL Time Warner Inc’s Warner Music, EMI Group Plc, Bertelsmann AG’s BMG, Vivendi Universal’s Universal Music, and Sony Music.

Echo, one of the few remaining stand-alone online music providers, said it is close to deals with other major labels, which face pressure to license their music to independent operators as the Justice Department has stepped up an anti-trust probe into MusicNet and Pressplay.

Echo, based in San Francisco, said it was one of several smaller firms to receive a civil investigative demand from the Justice Department involving the probe.

Echo and representatives from several online companies have recently said their talks with the major labels appeared to have gotten a boost after the Justice Department revealed last month it expanded the probe.

“We’d been discussing this deal with Warner since well before the Justice Department probe, but having said that, I think there is increased pressure for content owners to license music,” said Tuhin Roy, executive vice president of strategic development for Echo.

The deal announced on Monday builds on a November 2000 deal with Warner under which the label licensed music to Echo’s Web radio service that offers streamed music.

“We’re close to closing similar deals with other major music groups,” Roy added.

Vidich of Warner said he expects many services will emerge as a result of multiple licensing deals from market players.

“I think you’ll see a number of services with licenses and several competitors the marketplace,” said Vidich.

In another example of the intensified licensing climate, Napster – which is developing a new service to replace its idled song-swap program – on Monday said it reached a licensing deal with Italian online distributor Vitaminic SpA.

Under the deal, Milan-based Vitaminic will license 250,000 digital tracks of its catalog for the new file-sharing service Napster plans to launch in first quarter 2002.

Another upstart, FullAudio Corp., has recently reached various licensing deals with music publishing firms as well a deal for the recorded music of music giant EMI.

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