After more than two years of fighting pitched legal battles against online piracy, Universal Music Group is making plans to dabble in the same file-format technology — MP3 — that helped make Napster into a worldwide music-swapping phenomenon.
The major label group, which dominates the industry with a nearly 30% global market share, is set to announce todaythat it will license roughly 1,000 albums for use on the MP3-based subscription service of Emusic, a fellow division of French conglom Vivendi Universal.
For a fee of between $9.99 and $14.99 (depending on the time commitment), Emusic’s 50,000 subscribers will be able to download the UMG tracks and keep them permanently.
Since the MP3 format doesn’t include copyright-protection measures, they also will be free to transfer them to personal devices, burn them onto a CD or even upload them to a free file-sharing service such as Napster scions Kazaa and Morpheus.
But don’t expect the latest from UMG’s stable of white-hot young rappers on the service; the albums being contributed to Emusic are mainly culled from deep in the company’s catalog. Included is classic material from big names such as Stevie Wonder, John Coltrane and Buddy Holly, but almost no new acts.
“I don’t think you’ll be seeing Eminem (in a licensed MP3 format) soon,” UMG tech guru Larry Kenswil said. “You’re looking at a lot of music that is now harder to find — what you have is large pieces of what I think is the greatest jazz and blues catalog ever assembled.”
Kenswil and Emusic topper Steve Grady argued that the subscription offering, which includes a lot of independent label fare but no music from other majors, caters to hard-core music fans hunting for tunes like those covered by the Universal licensing.
Execs said the new system will open a commercial channel for artists whose name recognition is high but whose off-the-rack sales may have waned in recent years. The ability to squeeze new dollars out of old content may fulfill, albeit in a modest way, the long-lost potential of the Web as a fiscal medium for labels.
Obtaining clearance for the licensing deal wasn’t difficult since online distribution is generally allowed in older contracts unless the artist specifically negotiated an exception. Royalties for artists covered under the pact will be similar to those earned on CD sales.
The move appears to be a dramatic about-face from past policy on the MP3 format, which has long been seen as the genesis of the free-music revolution on the Net.
MP3 files are far smaller than CD audio files, letting the average Napster user download a track in a few minutes rather than a half-hour or more. With no security features, MP3 also became the bane of rights-holders who sought to control the way their music was distributed.
But Kenswil said Tuesday that the potential for a new revenue stream is sufficiently enticing to trump fears of mass piracy, adding that the kind of die-hard music fan attracted to the Emusic service is probably less likely to pirate the tunes.
Besides, he said, “we’ve been selling music in an unsecured format for years now — it’s called the CD.”