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Teutonic music internet platform

World Brief

COLOGNE – Germany’s music industry has cleared the path for a joint internet music platform as an alternative to the file swap web services operating on legally undefined grounds.

At music trade show PopKomm in Cologne, music labels announced an agreement they have reached in cooperation with telecommunication company Deutsche Telekom to provide a service for legal downloads. Under the working title “Phonoline”, Germany’s affiliate of the International Federation of the Phonographic Industry (IFPI) will introduce an interface fed from the labels’ catalogs that allows downloads for fees. Preparations have matured to the point that the introduction of the new system is expected for Fall this year.

Unlike Napster or Kaaza, the industry’s solution will not necessarily be bundled on one website, but is planned to be integrated into the offer of online music retailers. Deutsche Telekom’s subsidiary T-Com is to contribute its platform UDS (Universal Delivery System) for the technical handling of the music stream and of payment models. Prices per download will be figured out by the labels, a process in which the antitrust authorities are likely to have a say.

Representatives from all major labels hailed the agreement as a worldwide unique step forward against music piracy, and towards a recovery of revenues lost on the internet in recent years. According to IFPI, music sales in Germany went down by 16% in the first half of 2003. “We’ve fought long to enable Phonoline, and it’s been a difficult process of clarification, but the efforts have paid off,” said Thomas Stein, president of Bertelsmann’s BMG in Germany. His counterpart at Warner Music, Bernd Dopp, added that “the launch of a legal and attractive online service by the music industry starts off a new era of marketing and distribution.”

Apart from the majors – Universal, Sony, Warner, BMG, EMI, and Germany’s Edel, more than 120 smaller labels are reported to join forces on Phonoline. “Distribution on the internet will take an increasing share of our future sales,” said IFPI’s Gerd Gebhardt. “The venture will swallow an enormous upstart investment, but we expect to be successful with this offer in the years to come.”

Gebhardt pointed out that the newly-found common front will also take a more efficient position to fight piracy. To this effect, all downloads will have an electronic brand identifying the buyer, in order to control re-appearance on free trade platforms. Part of the plan is also that the music industry seeks to put pressure on access providers to find illegal suppliers and users of music files. Phonoline’s partners are deliberately blurry with a clear starting date, but clearly indicated that the move will be made this Fall.