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The Future of Digital Media

by Richard Koman
05/21/2001

Six months after nailing MP3.com with a $53 million judgment and just days after squaring off at a congressional hearing on music licensing issues, Vivendi Universal agreed to buy MP3.com for $372 million. That's a 66 percent bonus over the value of MP3.com's stock, although something of a comedown from its dot-com highs of a $7 billion market cap.

How does the acquisition affect Vivendi's joint effort with Sony to launch a subscription-based service called Duet? Vivendi says that MP3.com's technology is a "natural candidate" for Duet, according to Webnoize. "With MP3.com's proven technologies and team, we'll have the tools and talents to aid the success of this and other digital content distribution ventures," Vivendi chief Jean-Marie Messier said. Yet, The Wall Street Journal reports that the two services will be held at arms' length.

So it looks like the storage and streaming aspect of MP3.com will be the backbone of Duet's technology, and there will be some continuaton of MP3.com's services, although it's hard to imagine the company continuing the My.MP3.com service as a freebie. If there's a way to ensure the CD has already been bought and paid for, look for a surcharge for the right to listen to your CD online. It also figures that Universal would have first crack at all those super-hot unsigned bands promoting themselves on MP3.com.

Meanwhile, MP3.com has nonexclusive rights to the Duet catalog, preserving the Duet-Yahoo deal. But this leaves Sony forking over its catalog to a Universal-owned property. In any case, the Duet vs. MusicNet battle is heating up - and users continue to wait for a legitimate way to listen to music online. Some analysts even suggest that Rob Glaser's demonstration of MusicNet at the congressional hearing prompted the weekend closing of the deal with MP3.com.

While none of these developments is directly P2P, they certainly point to a move away from P2P for music distribution. I'm sure users don't care whether their music comes P2P or not, but they do care if it's widely available and quick to download. If these legitimate centralized services can take the force of 60 million users, P2P file-sharing will be left to the pirates. If not, Universal and the rest of the Big Five record labels will have an even bigger mess on their hands.

On the heels of these developments, we present a package of articles around the issues of online music:

  • "Who Will Make the Rules?" a report from a Washington debate featuring representatives from the RIAA, MPAA, Digital Media Association and Future of Music Coaliation.
  • "Compulsory Licensing Testimony," a wrap-up of statements to Congress made on Thursday by MP3.com's Robin Richards, Vivendi's Edgar Bronfman, Real's Rob Glaser, and ASCAP spokemsman and Lone Star crooner Lyle Lovett.
  • "Are We Promoting Piracy?" the transcript of a radio interview that David Lawrence conducted with Tim O'Reilly and Steve McCannell
  • "alt.napster," Steve McCannell's review of file-sharing clients being used as replacements for Napster.

Also related is Kelly Truelove's report on the declining use of OpenNap. For more information on online music and file-sharing, take a look at our File-Sharing, Napster and Gnutella topic areas.





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