Leader of the Bandwidth?

Kevin Conroy’s first job in music was to hit the high notes as star of his grade-school productions of “Jesus Christ Superstar” and “Godspell.” From there, he joined the church choir and sang competitively as part of a double quartet in college. His first concert? Three Dog Night.

Hardly the cutting-edge credentials one would expect from a guy on the front line of the ultra-hip, post-Napster digital music revolution.

But as the recently hired chief of music operations for America Online, Conroy again finds himself a lead player in a piece of musical theater: the high-stakes battle to push the recording industry into the Digital Age. America Online is considered well-positioned to dominate music delivery via the Internet, but so far its efforts have been lackluster.

Just how important his job will be was underlined this week when AOL’s parent, AOL Time Warner, and music labels Bertelsmann and EMI formed an online music platform called MusicNet that will license digital music downloads through AOL and RealNetworks.

Though attention has focused on RealNetworks, which will run the new service, some say AOL is the real winner. With its 28 million subscribers and now a licensing deal with three top music labels, AOL could emerge as the powerhouse of online music.

“They already own the online experience,” said Ric Dube, analyst at Webnoize, an Internet research firm in Cambridge, Mass. “Anyone with that many subscribers is going to be well-positioned in the [online music] market.”

Conroy joined AOL on Feb. 1, too late to have played a major role in the MusicNet talks. But he will head AOL’s new subscription music service, expected to launch in late summer or early fall.

“The opportunities are enormous because the vast majority of the potential has yet to be realized,” Conroy said recently in his still-unpacked top-floor office in midtown Manhattan.

The hard part, as Conroy well knows, is realizing it. He tried once before to marry the traditional music industry with the Internet, during five years as head of new technology and marketing at music label BMG Entertainment.

He launched a dozen genre-specific marketing sites, such as Peeps.com for alternative-music fans and TwangThis.com for country-music lovers. (These two are now run by GetMusic, which is financed by BMG Entertainment and Universal Music Group.) None of the sites caught fire, and most faded away without generating much money.

Instead, it was Napster that delivered what music fans really wanted: a file-swapping software that provided a simple way to download just about any song in digital form.

Conroy lined up with other music labels to sue Napster for copyright infringement and publicly criticized Napster executives for lacking a sound business model. But behind the scenes, he helped negotiate a partnership between BMG and Napster and then publicly characterized the deal as a “tremendous opportunity.”

That proved a precarious balance. Two months after the Napster deal was inked, Conroy joined an exodus of executives--including BMG Chief Executive Strauss Zelnick--who either quit or were forced out after an internal power struggle with BMG’s parent, Bertelsmann, about the Napster deal and the company’s e-commerce strategy. Conroy insists that he was not forced out but merely decided the time was right to move on.

Though Conroy didn’t hit any home runs at BMG, AOL is betting that his mainstream tastes, marketing skills and industry background will be just what the Internet giant needs to bring online music to the masses.

“The challenge we face in interactive music is not as much a technical challenge as it is a marketing challenge,” said Jonathan Sacks, president of AOL, a company that has used its marketing prowess to grow into the nation’s No. 1 Internet service provider. “Kevin is going to be great at that.”

The music industry viewed AOL’s selection of Conroy, 40, as a safe choice. Conroy was an early believer in the power of the Internet and pushed labels to use the new medium. But he also was seen as a loyal company man whose online pursuits focused on using the Internet as a marketing tool and never rocked the boat too much.

Now, as AOL’s music man, Conroy will have to do what Napster never did: develop a profitable, legal business plan and a piracy-protected technology that will persuade the five major music labels to license their content through AOL.

“The biggest challenge right now will be finding the right business model that resonates with the other four labels,” said P.J. McNealy, analyst at Gartner Inc., an Internet research firm. “And as we’ve seen, the labels don’t play well together.”

The MusicNet deal and a rival venture called Duet from Sony Music Entertainment and Universal Music Group are a start, but analysts predict consumers will want a platform that includes all the major labels.

By hiring a music industry insider such as Conroy, AOL is hoping to build a bridge to the other labels. Sacks confirmed that Conroy’s industry ties were a factor in his being hired. “He’s collaborative and not threatening to the music industry,” Sacks said.

To many in the industry, the market for online music delivery is AOL’s to lose. The company, whose subscribers must access the Web through AOL-controlled software, will have a major advantage over labels and music sites in reaching potential customers. Because AOL already has the credit card numbers of most users, signing up for its online-music service could be as simple as clicking “yes” on a pop-up ad.

A recent AOL study found that 70% of the company’s users said they would be likely to buy and download digital music via the Web.

AOL’s new music service is expected to allow users--for a monthly fee--to stream and download music to their computers. But users will not be able to copy music files, and they will lose access to downloaded files on the PCs if they cancel their subscription.

To date, AOL’s efforts in online music have impressed few. The company’s music operations are scattered across the country in corporate silos, rarely working together effectively and often reporting to different executives.

“The clock has started to tick,” Webnoize’s Dube said. “They need to establish an identity.”

He gets no argument from Conroy. “There are some wonderful properties, and those properties have been largely underutilized,” Conroy said. “Now is the time for us to pull it all together.”

Colleagues consider Conroy smart and hard-working, but he is also known for being long-winded and didactic. His heavy use of marketing jargon and corporate catch-phrases makes him the Al Gore of online music. CDs are “prepackaged media in hard form.” He gushes passionately about the benefits of “targeted awareness generation.”

“There’s a running joke about having Kevin on a panel,” said Pam Horovitz, president of the National Assn. of Recording Merchandisers. “He’s done so much homework that frequently he wants to share it all, going a mile a minute. If you’re one of the other guys on the panel, you might not appreciate it.”

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Music Alliances

AOL Time Warner stands to gain from its Warner Music arm’s pact with Bertelsmann and EMI to distribute music online. Universal and Sony have formed a competing service.

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Market share for new releases, 2000

Universal Music Group: 28.0%

Bertelsmann Entertainment: 19.4%

Sony Music: 15.4%

Warner Music Group: 13.5%

EMI: 8.7%

Other: 15.0%

Source: Times research