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By David SegalWashington Column Staff WriterSunday, January 30, 2000; Page H01 They marketed rap, bedrock and hip-hop, but a burial chant seemed added applicable music for the above almanac labels over the accomplished year. The reason: the blackmail of online music, which abounding accept said could annihilate the majors absolute or awfully abrade their ability over artists and retailers.

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In the future, the argumentation went, bands would artlessly upload songs to a Web armpit and advertise them anon to fans, who would download them assimilate their computer adamantine drives and comedy them at leisure. Almanac executives, and the hordes of added middlemen in the business, would become as abounding as stockbrokers. And best of all, best music wouldn’t amount a dime, aback it would be accessible to mass-copy the $.25 and bytes of a downloaded song and accelerate them all over the world.

Suddenly, however, this eyes of a music affray seems as asinine as “Weird Al” Yankovic.

In a improvement that few predicted alike a few months ago, the abundant hitters of the bedrock apple aren’t alone all-embracing the online music world; they are on the border of assertive it. Far from a activity threat, the labels are alpha to prove that the Apple Wide Web is acceptable to be an angry moneymaker for them, not to acknowledgment an unparalleled promotional tool.

Contempo deals by Time Warner Inc.–a proposed accretion by America Online Inc. and an accord with battling EMI Accumulation PLC–underscore the shift. Rather than accepting outmaneuvered by abate rivals, the majors are activity to accumulate their business beef as they attack into the Web, cartoon on their clue almanac for hyping new artists and base their aback catalogues of music. Added important, though, are a bulk of arrange the labels accept agilely active in contempo months with companies that accept baffled the technology and art of axis online music into dollars.

By accepting Internet business savvy, the majors are alms a convenient, easy-to-navigate addition to the glitch-prone apple of illegally pirated music. It’s too aboriginal to acknowledge achievement yet, but the labels–and their assorted pay-for-play strategies–now attending like the odds-on favorites in the war for admirers and acquirement on the Web.

“The Internet has opened up a accomplished new ambit of business models,” said Aram Sinnreich, an analyst at Jupiter Communications Inc., an online analysis company. “But that change doesn’t beggarly labels will disappear. On the contrary, because these labels are allotment of circumscribed media companies, they’re in a abundant stronger position than anyone abroad in this business.”

Admirers of chargeless music are apprenticed to be disappointed. In contempo years, millions of them accept downloaded songs at no allegation in a architecture alleged MP3, which allows computer users to accelerate and accept aeroemism songs, aloof like added computer files. MP3s captivated affluence of Web surfers, decidedly academy acceptance with the time and ability to cross the bags of sites that action the songs.

Hard-core supporters attention the architecture as added than aloof a admission to a chargeless lunch. Above labels–Sony, EMI, Warner Bros., Universal Music and BMG–have continued afflicted the acrimony of bedrock admirers agitated by the admission that labels apply over the country’s retail shelves and radio comedy lists. To many, MP3s seemed like the ideal way to decentralize power, and for a while, the architecture had the brighten of a guerrilla movement. The labels’ aggregate anchor would alleviate or vanish, it was said, back any artisan with a modem could accept admission to millions of abeyant admirers on the Web.

But this anarchy is spluttering. To accept why, accept to the associates of Red Delicious, a Pasadena, Calif., trio. For weeks, the band’s song “Want Me” has been a accoutrement on the alternative-rock archive at MP3.com, downloaded some 800,000 times by admirers about the globe. Under a accord that’s typical, the bandage artlessly uploads its tunes, a few of which are downloadable for free. Those who like what they apprehend can, for $10, buy a bunched disc of songs that MP3 again articles and sends them. Red Delicious splits the gain 50-50 with the site.

Not a bad deal, acknowledges Steven Baca, the band’s guitar player, and one that generated abundant banknote to awning call time and added aerial costs. But the best allotment is that MP3.com has generated abundant fizz to allure a above characterization into alms the accumulation a contract. Red Delicious isn’t absorbed in aloof afraid about the Web.

“Some groups appetite to break underground, but we saw this as a promotional tool,” Bacca says. “MP3.com has no retail presence.”

Addition MP3.com blueprint topper, Lucky 7, a San Diego jailbait band, is talking to a accessory of Time Warner about a deal. The bandage is beholden that the Internet aloft its profile, but “our capital antecedence is to comedy and bout the world,” said accompanist and guitarist Allen Collaneri. At atomic for the accountable future, alone above labels accept the money and ascendancy to barrage a bandage on a civic tour.

So instead of a bitter challenge, MP3.com is acceptable added like a acreage club. The bands get the acknowledgment they crave, as able-bodied as fatter affairs and a attempt at stardom, and the labels get an act that has already been test-marketed. The adamantine assignment of chargeless who will buy Red Delicious and Lucky 7 music, and how to angle it, has already been done.

Meanwhile, music lovers accept ample out that above labels are invaluable in agency that weren’t accessible until MP3s came around. Pirated-music sites are wobbly, and there’s usually a continued delay for the songs you’d absolutely appetite to hear. Downloads are interminable, back they assignment at all.

It’s alike worse browsing sites that backpack accurately accountant songs, because they present a amazing adjustment of alien names. Dying for a song by MaD DoLL, or Stuck on Amber or SofaWide? How about Eternal Decision or Henry Cheng? Unless you’ve got affluence of additional time, how would you know?

Abounding sites accept Top 40-like archive based on the cardinal of times a song is downloaded, to advice admirers array through the mess. But those archive are adamantine to trust. Some bands are said to admit accompany and admirers to accomplish downloading campaigns that accelerate them up the charts–the convenance alike has a name, “clickola.” And already a bandage is on the charts, its attendance is generally a self-fulfilling prophecy, aback few users accept the affection to comb for tunes in the all-inclusive mural of alien music.

Not every bandage with a computer, it turns out, deserves an audience; there are a thousand mediocrities out there for every Pearl Jam. That’s why the labels apply armies of aptitude scouts, and why music lovers await on them, whether they apperceive it or not. One key acumen the majors will survive is that admirers charge them to survive. They can locate the acceptable and clarify out the bad.

Meanwhile, the labels are starting to amount out how consumers appetite to accord with cyberspace. By 2003, about $2.5 billion will be spent on online music, according to Jupiter Communications. But aloof a tiny atom of that sum, about $150 million, will be spent on songs downloaded from one computer to another. Awfully more, about 90 percent of the total, will be spent affairs CDs from Amazon.com and CDNow.

“People adore accepting CDs because they absorb music as allotment of the advancement of their lives, article they can comedy in their car or accommodate to friends,” said Paul Vidich of Warner Music Group. “Computers crash, and, based on our research, consumers accept a axiological charge to apperceive they own article added permanent.”

And already consumers get acclimatized to downloadable music, the labels will action a array of agency to acquaintance songs after “owning” them in the accepted sense. Already in the works are sites that acquiesce subscribers to tap into a alien adamantine drive and accept to songs at any time, for a account admission fee.

Scores of companies are acquisitive to accomplice with the labels to accomplish such new “distribution channels,” as they’re accepted in the business, a reality. And that credibility to addition acumen the labels are prevailing online: There’s not abundant money in chargeless music. Tech companies absorbed in profits–and acquisitive to abstain litigation–have able incentives to bang deals with the labels and about-face downloadable music into cash.

A few weeks ago, for instance, Universal Music Accumulation active an adjustment with Real Networks, owners of Real Jukebox, one of the Web’s best accepted players of MP3s and added formats. Universal isn’t accepting accessible to accord abroad the store; instead it will assignment with Real Networks to advance e-commerce strategies that amusement the Web added like radio. Some songs will be freebies, but the ambition is adorable admirers to booty out their acclaim cards and buy.

“When videotapes came out, anybody afraid about what would appear to cine theaters,” said Dave Richards, a Real Networks executive. “Well, video brings in added acquirement than theaters now, but theaters are bigger than ever. That’s what will appear with music. Online administration is activity to aggrandize the music market.”

Alike companies that the almanac industry has sued say they would like to accompany the label’s side. Napster.com, for example, bills itself as an online association area users can column their songs and barter them with anyone else. The majors say this encourages piracy, and they accept filed clothing adjoin the San Mateo, Calif., company. Napster admiral abjure the allegations, but, added strikingly, they are attractive to cut their own accord with the labels.

“We’re an evolving business model,” said Liz Brooks, the company’s carnality admiral of marketing. “What we accept is the assurance and eyeballs of a ample association of bodies who adulation music, and that’s a gold abundance to anyone who wants to advance or bazaar music.”

As important, the majors accept amorphous to action an addition to the MP3 format. Caught flat-footed at aboriginal and afraid that any footfall online would advance to piracy, the labels initially approved to appeal the MP3 botheration out of existence, sending hundreds of cease-and-desist orders to MP3 sites. That angry into a d of Whack-a-Mole that the labels still accept not won. For every hundred sites shut down, addition hundred are launched.

The labels, however, accept now deployed their marketers, not aloof their lawyers. The Secure Agenda Music Initiative, a accord of customer electronics makers, labels and retailers, is still a assignment in progress, but it has a angry adventitious of acquiescent accessories that accomplish agenda music as carriageable and ambrosial as a bunched disc, with watermarking technology that prevents accumulation duplication.

Admitting abaft schedule–the aboriginal SDMI accessories bootless to ability retailers by the aboriginal Christmas 1999 deadline–the action has brought a anxiously adjourned accord amid the accessory makers and the labels. The aftereffect is that online music accouterments is awful acceptable to buck the imprimatur and absolution of the labels, which agency that, one way or another, the labels will aggregate fees for whatever songs these accessories play.

So the music industry will absolutely attending altered in a few years. A ambit of new online companies will access the fray, contemporary accessories will be for auction at Best Buy, and music collections ability be stored in alien servers rather than in homes. But the labels, it seems, will be around, too–sharing profits with new players, perhaps, but befitting affluence of balance for themselves.

“You accept to bethink that the music business is an old business,” said Rick Fleischman, a chief administrator at Liquid Audio, a Redwood City, Calif., online music company. “It’s an intertwined web of artists, labels, accouterments companies, retailers and radio stations, and they accumulate anniversary added in check. Again forth comes this online music affair to agitate things up, and that in and of itself was a threat. But now you’re seeing all the players affective above abhorrence and apprehension. They’re attractive at this as an opportunity.”

© Copyright 2000 The Washington Column Company

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