Congressional Panel Sees Preview of Online Song Service MusicNet

In a possible preview of the future of music retailing on the Internet, a software developer on Thursday showed a congressional subcommittee a “legal Napster”--a new online subscription service that lets Web surfers rent or buy single songs rather than an entire CD.

RealNetworks Inc. Chairman Rob Glaser claimed the service is secure from pirates--as artists have demanded--with a searchable list of songs that are easy for consumers to purchase, download and play.

Glaser’s first public demonstration of the new online service MusicNet--a joint venture with AOL Time Warner Inc. that is scheduled to debut this summer--came at a time when music publishers, songwriters and record labels are at odds over online music distribution.

All sides view the growing popularity of online music as an opportunity to rewrite the rules of the $40-billion-a-year music industry and increase their take. Yet all sides fear there may be no pot of gold in cyberspace if Web sites can’t figure out a way to distribute music only to consumers who pay for it.

Country songwriter Lyle Lovett, who testified to the House Judiciary subcommittee on courts, the Internet and intellectual property, said downloading music from the Web is “one of the main reasons for the growth of the Internet.” But Lovett said Web sites should pay for the privilege to offer music downloads.

He chided services, such as MP3.com Inc., that allow consumers to store and play back their store-bought CDs online without paying additional royalties. Artists should be paid a second time, he said, when consumers want to enjoy musical works on some other medium.

“By purchasing the CD, it doesn’t mean you own the music,” Lovett said. “We are just asking to be compensated for the separate use of our music.”

But Robin Richards, president of MP3.com, told lawmakers that new copyright laws are needed to encourage online music services. He suggested legislation to clarify music royalty rates for Web sites because negotiating agreements with songwriters--who have disparate legal representatives--is too cumbersome.

“Congress needs to bring rationality back into the Copyright Act,” Richards said.

Glaser and Edgar Bronfman Jr., executive vice chairman of Vivendi Universal, echoed Richards’ call for federal reforms.

But a lobbyist for Napster Inc., which was not invited to the hearing, submitted written testimony saying federal intervention was not needed.

“Congress should not be picking winners and losers in the online music marketplace,” Napster Vice President Manus Cooney said in a seven-page statement. Cooney said Congress would be better advised to “take action to prevent the record companies from shutting Napster down.”

Glaser offered MusicNet as one way to help settle the dispute.

The MusicNet service, which is backed by three record labels, allows consumers to locate and download music from thousands of recording artists with the click of a computer mouse.

In a computer mock-up, Glaser first typed in the word “love” to display a list of hundreds of songs with that word in the title. Then he typed in the artist “Poe” and selected a song for downloading.

For a monthly subscription fee that has yet to be set, users of the service would be able to download dozens of songs and listen to them for up to 30 days.

Glaser said the service can’t get off the ground unless record labels negotiate licensing deals with the myriad groups that represent songwriters and composers who hold copyrights.

But some music publishers representing songwriters want to negotiate directly with Web sites, not the record labels. Others have concerns about security.

MusicNet has not publicly discussed its security features, nor explained how it would be able to ensure that music files were not freely swapped like Napster’s.

Rep. Chris Cannon (R-Utah), asked Glaser whether subscribers might be able to capture music files while they are temporarily stored in a computer’s memory for playback. Glaser said consumers wouldn’t be able to assemble an entire song from such data.