Best Of '99: Universal Unveils Global Download Distribution Plan

Home of DMX, Shania Twain, looks to be first major label with its own online music sales strategy.

[Editor's note: Over the holiday season, SonicNet is looking back at 1999's top stories, chosen by our editors and writers. This story originally ran on Tuesday, May 4.]

The world's biggest record company, Universal Music Group, is looking

to take the lead in online music sales via a plan announced Tuesday

(May 4) to begin selling tracks by download in late summer or early

fall.

UMG — whose many labels are home to artists including DMX, U2, Nirvana,

Guns n Roses, Marilyn Manson, Nine Inch Nails, Sting, Sheryl Crow, the

Police, Tupac, Hole, Rob Zombie, Sonic Youth, Shania Twain and Beck, to name a few —

will launch a pilot program with InterTrust, a company that has developed

copyright-protection technology.

"From what I can tell, artists are eager" to sell their work online,

said Larry Kenswil, Universal's president for global electronic commerce

and advanced technology.

The plan will put UMG months ahead of the industry as a whole, which is

seeking to begin the widespread sale of downloadable music next year.

The announcement comes amid a flurry of recent developments in the music

and technology industries.

On Monday, RealNetworks, maker of the RealAudio and RealVideo players,

unveiled its first software for playing MP3 files, with the goal of

putting the program in the 60 million computers that already use its

other products.

Last week, Alanis Morissette and her management company announced a

partnership with the website MP3.com, which major labels had largely

shunned.

Here's how UMG's plan would work: A listener goes to a website and sees

a Universal song he or she wants, such as Sheryl Crow's "My Favorite Mistake"

(RealAudio

excerpt). The listener downloads the track, which comes in

MP3 or another digital format packaged in InterTrust's "DigiBox" technology.

The cut can then be played on a product certified by InterTrust, such as

Microsoft's new Media Player, or Diamond's Rio portable MP3 player.

Depending on conditions set by the music label, the downloaded cut

could be played, for instance, two times for free, at which point the

listener would be asked to buy it outright for $1 or $2 or pay a quarter

for each subsequent listen. The user could also send the track via e-mail

to friends, who would be given the same options.

Universal plans to use the technology not only on the Net, but offline

as well, Kenswil said. A CD might come with an extra hidden track that

could be played a few times for free, but then would require payment. Or

a DVD version of an album could also include an artist's entire catalog,

which could be unlocked through an InterTrust payment.

InterTrust has spent nine years and $60 million creating the copyright

protection technology it hopes to sell not only to Universal but to the

entire music industry, according to Joe Jennings, senior vice president

of marketing.

"No one really knows what propositions consumers will accept,

and what will excite them," Kenswil said. "What we need is the flexibility

to try different things."

Jennings said, "MP3 has already proven that people are willing to do

downloads."

Universal is also looking at giving away DigiBox songs at kiosks in

music stores, Kenswil said, but music fans should expect tracks to appear

first at Universal websites such as Getmusic.com and at online retailers.

Earlier this year, computer giant IBM announced a spring pilot program

to sell downloadable music from all five major record distributors —

Universal, Sony, Time Warner, EMI and BMG — to cable-modem subscribers

in San Diego. Unlike that proposal, Universal's program with InterTrust

will be available globally.

Meanwhile, the five majors and numerous technology companies are working

on the Secure Digital Music Initiative, which aims to have

copyright-protection standards in place for devices such as the Rio by

June, and for all online music by next April.

The Universal-InterTrust partnership "is a key milestone," said Mark

Hardie, who analyzes the entertainment and technology industries for

Forrester research. "The majors aren't sitting still, and SDMI is not

going to be the word from on high that they're all going to wait on,"

he said.