MusicNet to Distribute Zomba Songs

Lining up more record-industry support as it moves closer to launching, online music company MusicNet announced Tuesday that it will distribute songs from the leading independent label group, Zomba Records.

The deal, announced at a conference here, adds music from chart-topping artists such as Britney Spears and ‘N Sync to MusicNet’s roster of songs from BMG Entertainment, EMI Group and Warner Music Group. Zomba also will take a small equity stake in MusicNet, which is jointly owned by AOL Time Warner Inc., EMI Recorded Music, Bertelsmann and RealNetworks Inc.

MusicNet plans to distribute songs through online companies, including AOL and RealNetworks, starting later this year. One hurdle is gaining the necessary licenses from the music publishers.

Rob Glaser, chief executive of RealNetworks and interim chief executive of MusicNet, said the publishing issues were “nettlesome,” but he saw a couple of possible routes to a solution. “I don’t believe that at the end of the day, these issues will prevent or delay our launching,” he said.

MusicNet’s roster doesn’t include the two largest record companies, Universal Music Group and Sony Corp., which are co-owners of a rival venture, Pressplay. Pressplay plans to distribute its songs through Yahoo Inc., Microsoft Corp.’s MSN Music and MP3.com.

Edgar Bronfman Jr., executive vice president of Vivendi Universal, said Pressplay would be available in early September. But he added that publishing “remains a significant obstacle.”

A key difference between Pressplay and MusicNet, Bronfman said, is that Pressplay dictates the prices charged by its online affiliates and MusicNet does not.

“We are concerned that the continuing devaluation of music will proceed unabated unless we do something about it,” Bronfman said. By offering cut-rate music subscriptions, AOL and RealNetworks “can advance themselves on the back of the music industry,” Bronfman said, adding, “We really don’t want to see that happen.”

But many of those attending the conference, which was sponsored by the Jupiter Media Metrix research and consulting firm, said the split between MusicNet and Pressplay is bad for both services and for the online-music business. Andreas Schmidt, president and chief executive of the Bertelsmann eCommerce Group, described the split as “crippling” and said, “One-stop shopping [for online music] must become a reality, and it must happen fast.”