LOS ANGELES, (Reuters) - EMI Group Plc. Tuesday became the first music label to join two Web music services being launched by major recording companies by licensing songs to Pressplay, a service owned by Sony Corp. and Vivendi Universal.
The EMI deal comes as U.S. antitrust authorities continue to scrutinize the online ventures and as the Web services attempt to set themselves up as all-in-one music sites of the kind popularized by the now-shuttered Napster service.
"There is clearly huge demand for music delivered digitally and we want to support as many innovative and competing music services as possible," said Jay Samit, senior vice president of new media for EMI Recorded Music
EMI, the world's No. 3 record company and home to such acts as the Beatles and Janet Jackson, is also one of three major labels backing Pressplay's rival MusicNet service.
MusicNet's other partners are AOL Time Warner Inc. Bertelsmann AG and digital media company RealNetworks Inc.
Samit said music from most of EMI's 1,600 artists will be available on these and other subscription services, with the exception of the cherished Beatles catalog.
"The Beatles and their management are still exploring and getting comfortable with the Internet," Samit said.
The major labels have been working to establish online services to exploit the huge potential demonstrated by Napster, which in its heyday attracted millions of users. The song-swapping service is now idle as a result of a copyright infringement lawsuit by the music industry.
COMPETITION WITH 'PIRATE SITES'
Both MusicNet and Pressplay plan to launch within months, but face the challenge of convincing fans, many of whom have used Napster and other free services, to pay subscriber fees.
"The real competition is not between Pressplay and MusicNet. It's between legitimate subscription services and the pirate sites. That's why we want to make sure our artists are in as many services as possible," Samit said.
Both online services are trying to cross-license music because executives believe the pay-for-use services need to offer music from all the labels in a single location in order to succeed.
MusicNet has said it hopes to offer music from Sony and Universal, while Andy Schuon, Pressplay's president and chief executive officer, Tuesday said talks with Bertelsmann's BMG and Warner were continuing.
"There really is no hurdle. The EMI deal was a great endorsement of our service and it's a matter of the other labels believing in Pressplay," he said.
Richard Wolpert, strategic advisor for MusicNet, called EMI's licensing deal a positive development for the industry.
"MusicNet has always aimed to deliver the most comprehensive catalog of content to consumers and this shows that the labels will be looking to license their catalogs to other parties in order to offer the broadest possible selection of music to consumers."
Warner declined to comment, but a spokesman for BMG said that BMG is considering a number of opportunities in the area of online music. "We won't comment on specific opportunities until we have an agreement," the spokesman said.
EMI has also reached licensing agreements with online music firms Full Audio, HitHive and Streamwaves.
Shares in EMI fell eight pence or 3.3 percent to close at 237 pence in London on Tuesday after an analyst's earnings downgrade and a sharp decline among European media shares.
Lehman Brothers said on Tuesday it had halved its price target for EMI to 280 pence from 560p, saying the deteriorating music market faced uncertainty about the Internet and piracy.
Lehman cut its forecast for EMI's 2002 pre-tax profit by 29 percent to 197 million pounds ($288.9 million), while cutting the 2003 forecast by 23 percent to 227 million pounds.
