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
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
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
"We're going to see a lot of interesting developments as competition heats up in
that space," Sherman added.