In a joint press release, AOL Time Warner Inc., Bertelsmann AG, EMI Group plc and RealNetworks announced on Monday a "breakthrough platform for online music subscription services."

All four companies will own minority stakes in the new company, though specific terms of the agreement have not been divulged.

"The launch of MusicNet will catalyze an exciting new era in digital music distribution," RealNetworks CEO and chairman Rob Glaser said in a prepared statement.

"MusicNet will offer consumers an easy, simple way to get the highest-quality music while also protecting the intellectual property of record companies and artists," Glaser added.

Glaser, who will also act as CEO of MusicNet, invited both major and independent labels to play a part in the new venture and "to make music subscription services a reality."

Political Motive?

Though rumors of the agreement have circulated since last week, the reason behind Monday’s announcement may have something to do with Congress' plan to hold talks on online copyright issues this week.

The discussions begin Tuesday in the Senate Judiciary Committee, whose chairman, Sen. Orrin Hatch (R-Utah), has been among Napster’s staunchest supporters.

"RealNetworks does garner an advantage in Washington circles by announcing this deal at this point in time, but one can't necessarily [cite this reason] as the only one," Steve Vonderhaar, a music analyst with the Yankee Group, told NewsFactor Network. The need to "speed [the platform] to market and managing the news cycle also come into play here."

"From a public relations standpoint, they are striking while the news is hot," added Vonderhaar. At the same time, however, "if they had all their ducks in a row, it would make sense to gain that political benefit. It may be one hint why [news of the partnership] may be moving faster than average."

Incomplete Distribution Center

According to all parties involved, MusicNet will operate as a distribution center for online music and provide the technology needed for users to access these files.

The subsidiary labels of all three label partners will license their songs separately on a non-exclusive basis, and there is hope that the subsidiaries from the remaining two "Big Five" companies, Vivendi Universal and Sony, will join the party.

Yet even with the varied offerings of the three major labels involved, including such recording stars as Christina Aguilera, Faith Hill, and the Dave Matthews Band, Gartner Group music analyst P.J. McNealy told NewsFactor that he is skeptical about the immediate success of the venture. (continued...)

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