Universal, BMG Join Forces On Net

New online venture combines rosters of labels that are home to Britney Spears, TLC, Hole, Jay-Z, many others.

NEW YORK -- Two of the world's biggest record companies, Universal

Music Group and BMG Entertainment, announced Wednesday (April 7) they are

teaming up to promote their artists and sell records via the Internet.

The joint online venture, to be called Get Music, will consist of genre-based

music websites featuring artists from the two companies' rosters, which include

such major stars as BMG's Britney Spears, TLC and the Dave Matthews Band

and Universal's Hole, Jay-Z and Eminem. Together, the two companies control

40 percent of the U.S. music market.

All the sites will be linked to BMG's existing online store at getmusic.com, where

fans can buy CDs for mail-order delivery. But the companies do not plan to offer

downloading of albums via the Net, according to Larry Kenswil, president of

Universal's electronic-commerce division.

"We're not setting up this venture for direct delivery," Kenswil said during a

press conference Wednesday morning.

But the labels do expect to offer unreleased recordings and live material via the

various websites, Kenswil said. He said BMG and Universal hope to attract fans

with that and other content "not available" to sites that aren't affiliated with

record companies, such as "backstage access [and] exclusive contests."

Kenswil did not say in what form any such unreleased material would be

posted, or if it would be made available for free.

The announcement represents "a good step" for record companies into the

online arena, said Michael Robertson, chief executive officer of MP3.com, a

popular website that serves as a clearinghouse for near-CD-quality music files.

But it will remain a "baby step" until the record companies "give people some

digital-delivery options," Robertson said. The ability to buy albums for download

is "what people on the Net are asking for," Robertson said.

The five major record labels -- Universal, BMG, EMI, Sony and Warner Music

Group -- have announced a test of online music delivery to be conducted this

spring in San Diego in conjunction with computer giant IBM. Separately, the

labels have said they hope to have a standard in place for secure transmission

of music via the Net by next year. So far, the majors have resisted MP3

technology, saying it encourages piracy.

Executives from BMG and Universal said their plan is not intended to threaten

existing online and "brick and mortar" retailers. BMG Entertainment president

Strauss Zelnick said the websites will "encourage consumers to purchase CDs

from all outlets"; getmusic.com will feature a search function to help consumers

find record stores near their homes.

Bill Curry, a corporate spokesperson for Amazon.com, which is a leading online

retailer of CDs, said his company is not worried by the announcement.

"We try to keep our attention focused on our customers and not on what

competitors are trying to do," Curry said. "What we hope is that, whatever they

do, they provide a level of service that reinforces people's good feelings about

participating in e-commerce and shopping online."

The joint websites will be built from BMG's existing slate of sites, including the

hip-hop/R&B site "Peeps Republic" (www.peeps.com), which hosts the official

web pages of Britney Spears, TLC -- whose hit album Fan Mail includes

such tracks as "No Scrubs"

(RealAudio excerpt) -- and others.

Some Universal artists already have been added to BMG's websites, which

also include "Rock Universe" (www.rockuniverse.com) and the alt-rock site

"BUGjuice" (www.bugjuice.com).

Edgar Bronfman Jr., president and chief executive officer of Universal's parent

company, Seagram, did not rule out the possibility of further collaborations

between BMG and Universal.

"We have a shared vision for the music business," Bronfman said. "We'll see if

the relationship will expand."

Informal talks about the joint venture began just after Universal merged with

Polygram in December, according to Zelnick. That merger, which folded such

Polygram labels as A&M, Mercury, Motown, Def Jam and Island into Universal,

made Universal the world's biggest record label; it also resulted in extensive

layoffs.

Cary Sherman, senior executive vice president of the Recording Industry

Association of America, an industry trade group, said the Internet alliance

"reflects the continuing and deep interest of our companies in the online

medium."

"We're going to see a lot of interesting developments as competition heats up in

that space," Sherman added.