Web plays first 8 bars

Internet takes baby steps into music distribution

Right now, it’s just a trickle. But will the slowly rising tide of Internet-delivered music prove to be the flood of Web content that musicians, managers, record labels and online mavens think — or fear — it will become?

A few firms are moving forward on the notion that one day soon the Internet will be able to carry high-quality audio and video content safely, efficiently and easily enough that the electronic medium could augment, enhance or even replace current means of musical product distribution. With the increasing availability of new recordable CD players that can turn a home computer into a personal compact disk factory, it’s a possibility that dances tantalizingly close to some entrepreneurs’ eyes.

Much of this week’s buzz can be traced to a Silicon Valley company called Liquid Audio, whose technology is at the center of several of the most recent and ambitious attempts to distribute and sell music over the Internet. The company has developed a set of tools that enable record companies — or anyone who owns a recording and an Internet server — to master and deliver CD-quality music over the Web.

Online CD-seller N2K Inc., well-known to web-surfers for its rock, jazz and classical music oriented websites, last week opened its first digital-delivery service, using the Liquid Audio technology to offer songs from 15 artists for sale on their website, ready to be downloaded to anyone with a computer and a credit card.

It’s still not big business: in three days, shoppers downloaded 600 songs from N2K, which is selling the tracks at an introductory price of 99¢ per tune.

But the usual new-tech growing pains — among them a lack of standard formats, the wait-and-see stance of major record companies — prompt others to dismiss electronic distribution as superficial, tangential or just downright impossible.

“This really just proves that the concept of electronic distribution can work,” said Larry Rosen, CEO of N2K. “The Internet won’t replace record stores any time soon, but it’s going to be one of the ways that music is distributed.”

In any case, the first moves in what is sure to be a lengthy chess game are now being made on the World Wide Web and, as befits the game, it’s the pawns who would become royalty that are making the initial moves. Technology’s power elite — the Microsofts, the TV/radio networks, record companies and media conglomerates — are watching with interest and are making tentative alliances, but their presences haven’t yet warped the playing field.

Ahead of the studio

So it’s up to the likes of firms like 911 Entertainment, Progressive Networks and Online Entertainment Network to get the ball rolling. These three concerns, along with a handful of others, are staking out their place in cyberspace, offering consumers a chance to download tunes, lyric sheets, even whole albums of material via the Web — and, in some cases, even listen to Band X’s latest release in real time while the band finalizes the master tracks in the studio.

But nothing will happen immediately. Although recordable CD players are dropping in price, few people own them. And who really wants to spend money and time to download music to play on their computer?

Still, echoing the sentiments of other music industry players, Rosen praised Liquid Audio’s encryption and digital watermarking technology that should prevent unchecked digital reproduction of music — always the great terror for record companies.

Most music distributors are testing the waters, if tentatively. For some distribs, it’s an enhancement to their regular business, not something devoutly to be feared. Executives at such major retailers as Tower Records, Musicland and Blockbuster Music have expressed interest at making Web-based marketing of music work in the long term (especially if it doesn’t replace consumers’ trips to their stores).

And the Online Entertainment Network, based in New York, has gone out of its way to include the established distribution systems in their Web-based startup, which comes online Sept. 10.

OEN chairman/CEO Irwin Roth says that every access of its virtual juke is registered with broadcast music licensers ASCAP and/or BMI, and that they will be paying licensing fees there like everyone else.

“In that sense, we’re not replacing anyone,” Roth said. “We see the Web-based models as yet another ancillary market that can augment the profile and the profits of the artists, their labels and all the other established outlets.”

Additionally, Roth said that OEN has developed proprietary means to avoid the traditionally mediocre audio and video reproduction that is part and parcel of current streaming technologies.

“I don’t want to say that it’s CD-quality exactly,” Roth deadpanned, “but it’s as close to excellent as we’re likely to get in the near term with this delivery vehicle.”

For others, the new audio world is a gateway to new realms of interactive, community-based entertainment. Steve Salyer, a former VP at software distribution giant Electronic Arts who now serves as CEO of 911 Entertainment, sees whole virtual communities springing up around favored musical artists, whether existent (like U2 or Ministry, for example) or yet to come.

“Now the record industry is in the position to reach out and individually touch each of its customers,” said Salyer, whose firm recently acquired the vast Web music database known as WILMA. “We are at the point where a ‘record’ can be a ticket to a place on the Web where you alone or people who share your tastes can congregate.”

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