The Digital Beat: MusicNet Doesn't Rock

December 12, 2001 12:00 AM ET

After much ado, much hype, and, for the recording industry, much hope, the first online music subscription service, MusicNet, launched on December 4th. The joint venture of RealNetworks, AOL Time Warner, Bertelsmann AG and EMI Group is essentially the major labels' first salvo in the war over online music, as it attempts to maintain a secure -- and profitable -- means of distributing digital music over the Internet. That it fails is no surprise. But by how much is what's astonishing.

In theory, here's how MusicNet works: For $9.95 per month, subscribers get 100 songs to download and 100 to stream to their PCs. There are over 75,000 songs to choose from, ranging from Radiohead to Missy Elliot, Frank Sinatra to Alabama. Members also get access to a couple thousand live radio stations from around the world. For an extra ten bucks a month, subscribers can upgrade to a "Gold" membership, which tacks on access to live college and pro sports events, as well as news feeds from CNN and the Wall Street Journal, and entertainment shows from the E! network. The media is played through Real Networks' new RealOne program, which combines both audio and video feeds into one player.

Yes, there are catches, many indeed. Most formidably, each song downloaded from MusicNet has a little thirty-day time bomb inside. After each month, the file is locked and can no longer be listened to until the subscription is renewed. Worse, the songs cannot be transferred to a portable MP3 player. And don't even think about burning the MusicNet tracks onto a CD. That won't work either. How insane is that? The whole point of digital music is its quick and easy mobility. Sounds to me like what these companies really want to be running is a record and tape club.

To make matters worse, MusicNet -- and its upcoming competitor, PressPlay (a similar service from Sony and Universal) -- is facing mounting competition from the free file-trading underground. Or, rather, over-ground. According to CNET's software site, Download.com, file services occupy forty percent of the top ten downloads. MusicCity's Morpheus is averaging over 1.5 million downloads per week.

How many people will pay for the same goods? Hard to say. Granted, there will always be surfers willing to pay $9.95 to get, say, Pink guilt-free -- maybe even enough to build a business around. But what's really so disappointing about MusicNet's plan is that it is so reactionary. How can these companies offer a digital music service that doesn't even let a consumer suck the songs onto an iPod or Rio and go for a jog? Sure the labels have to do something to protect their interests, but this is not the way to go about it. Ironically, the one saving grace of the service might be the Gold upgrade membership. A paid subscription makes perfect sense for exclusive sporting events, but not for anything that bears repeated -- or mobile -- listening.

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