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The Digital Beat: MP3.com Sells Out

May 29, 2001 12:00 AM ET

Not so long ago, MP3.com and Napster were the bad boys of the Internet: two brash start-ups born as rebellions against the monolithic music industry. Together, they colorfully represented the generation gap between the new and old economies. What happens? These same companies, after being sued and savaged by their arch corporate foes, end up selling out to the very Goliaths they once opposed. Yes, it's the end of the era. And fans will never steal Metallica the same way again.

Back in November Napster made the deal with its devil by joining forces with Bertelsmann, the powerhouse behind BMG, to transform the outlaw swapping arena into a subscription-based download service. For MP3.com (which, frankly, always found ways to disappoint) the news came on Sunday May 20th that Vivendi, owner of Universal, would pay $372 million to acquire the site. Just six months earlier, MP3.com coughed up $53.4 million to Universal after being sued for copyright infringement; the site's My.MP3.com service allowed surfers to download songs from an illegal online database of 80,000 CDs. Hey Vivendi, way to drive down that price!

Vivendi Universal plans to use the MP3.com technology to enhance Duet, an online subscription service its planning to launch this summer with Sony. Meanwhile, Bertelsmann will counter attack with MusicNet, a joint venture with AOL Time Warner and RealNetworks. The idea is that fans will pay a nominal fee to download new singles or even entire albums through a special membership plan. Think of it like Columbia House for the twenty-first century.

More importantly, think of it as the end of the minor league digital music wars. So much for the minor league battle of MP3.com vs. Napster. It's all Bertelsmann/Sony vs. Vivendi/AOL Time Warner now. Already, some analysts are predicting a backlash from Washington over antitrust concerns. How ironic is that? Just months ago, everyone was concerned about whether or not the major labels would have any control at all over the Internet. Now people worry that they'll have too much control entirely.

What does this mean for you? One thing for sure: There will be plenty more ways to get music online. Right now, especially for the average newbie/AOL subscriber, downloading music is still a bit of a mystery. With the corporate plans, look for the process to become nice, neat, clean, legal, and, of course, commercial. Also, we can expect the big kids to pump even more cash and resources into developing technology to ensure secure (read: bootleg proof) downloads.

One other certain: No matter how much control the labels have, they'll never -- no, never -- truly control the Internet. That notion, which is being suggested inherently by the possibility of antitrust hearings, is ludicrous. No company can control the Net; it's too decentralized. You and I will always be able to swap our MP3s one way or another. But the companies with the increasing share of power will at least make things more difficult.

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