Fee-Based Music Takes Hold on the Net

With legal action threatening to burst the bubble for digital download music fans, subscription-based services are springing up across the Internet.

On Tuesday, Sony Music Entertainment and Universal Music Group (UMG) announced plans to launch an online subscription-based service for selected titles, while Internet radio station Music Choice also announced a subscription service to complement its free digital streaming audio channels.

MP3.com followed suit a day later, unveiling plans for its own subscription-based online music service.

MP3’s Classic Move

Perhaps looking for some calm after being found liable for copyright infringement by a federal court, MP3.com is offering a new channel that will give paying subscribers access to more than 3,400 tracks of classical music — the equivalent of $3,500 (US$) worth of online CDs.

The San Diego, California-based company is introducing the classical music channel on a “no-risk” 14-day trial basis, saying that the library is so vast that “classical-music enthusiasts will never need to buy a CD again unless they want to.”

Islands in the Stream

While MP3.com may be looking for a way to extricate itself from the onslaught of lawsuits, other key players in the music industry are looking for the right business model to legally generate revenue from the explosion of Internet-delivered digital audio.

Sony Music and UMG — owner of A&M Records, Decca Record Co., Geffen Records, Mercury Records and Motown Records, among others — were among the handful of major record labels who brought the copyright infringement action against MP3.com.

Now they are working together on a subscription-based service to capitalize on the popularity of digital downloads. Sony represents Aerosmith, Celine Dion and Santana, while UMG represents Bryan Adams, Kiss and Stevie Wonder. The artists to be featured online have not been announced.

Music from Microsoft

Backed by an equity investment from Microsoft, Music Choice was able to increase its online channels to more than 30, two-thirds of which are available only through the new subscription service.

Dubbed “Backstage Pass,” the Music Choice service became available this week for the introductory price of $4.99 per year. Backstage Pass holders get on-demand access to archived special programs hosted by Music Choice’s Showcase I channel, such as “Unsigned,” “History of Hip Hop” and “Summer’s Greatest Hits.”

Microsoft and Music Choice have also announced plans to create additional Music Choice channels, which they will sell to other Web sites and offer in other co-branded environments — such as through wireless Internet devices. Backstage Pass will be marketed with Microsoft’s new Windows Media Player 7.

The two companies have been working together since last summer, when Music Choice made its channels compatible with Microsoft’s Windows Media Player 4. Microsoft signed on in January to sponsor the Music Choice Unsigned Program, which showcases unsigned artists’ digital downloads.