LOS ANGELES (Reuters) - MusicNet, the online music venture between RealNetworks Inc. and three major record labels, said Friday it plans to deliver its technology platform to distribution partners within weeks, the first step toward a full-launch of the new service for subscribers.
"Within a couple of weeks, our partners will have it in its final form," said Richard Wolpert, a strategic advisor to the venture.
MusicNet, backed by RealNetworks, AOL Time Warner Inc.'s Warner Music, EMI Group Plc and Bertelsmann AG's BMG, is one of two music subscription services poised to launch this fall. Zomba, a giant independent label, is also part of the MusicNet service.
Rival Pressplay, owned jointly by Vivendi Universal's Universal Music and Sony Music , said last week it was set for a mid-September launch.
"The normal course of business will resume on Monday and we will revisit the issue then," a Pressplay spokesman said on Friday.
Many Pressplay's employees were based in New York City, where business was at a standstill this week due to the collapse of the World Trade Center in air attacks, he said.
Pressplay is set to launch on Microsoft Corp.'s MSN, Yahoo Inc . and MP3.com. The service will also market directly to customers, offering a selection of somewhere between 70,000 and 100,000 songs.
MusicNet is a business-to-business venture, selling both technology and its content to partners such as AOL, RealNetworks and Napster.
"It's a two-phase launch," Wolpert said, adding that once MusicNet provides the technology to its distributors, they will have to integrate the encoded music and the software for its delivery with their other offerings. Both AOL and RealNetworks said this week they were on track to launch the service for subscribers sometime this fall.
NAPSTER HARD ACT TO FOLLOW
The new commercial services are aiming at the void left by Napster, which has suspended its free file-swapping service due to a copyright infringement lawsuit. Napster, which in its heyday attracted nearly 80 million users, is also in the process of reinventing itself as a paid service.
The new services face several key hurdles, including convincing users to pay a monthly fee, scrutiny from antitrust regulators and ongoing talks aimed securing all the necessary licenses for the music they offer.
"I think a better comparison (than Napster) is America Online, which took nearly eight years to get to a million subscribers," Wolpert said. "We don't expect significant numbers in the first 12 months. It's not going to be a million people."
The roll-out of MusicNet and Pressplay comes as a rift over publishing rates continues.
The services need licenses for both compositions and sound recordings, something which remains a sticking point amid a continued debate over terms.
Talks between PressPlay, MusicNet and publishers, who own the rights to underlying compositions, are ongoing but have hung up on the question of what rates are due publishers for songs provided in interactive Internet music services.
Industry members have said the dispute could hold up the launch of the new services, but Wolpert remained optimistic. "We do not believe the publishing issues will stop us from launching. We believe we'll have a resolution," he said.
"We're pursuing a lot of different ways to resolve this," he said, adding entire catalogs of music from the labels would not be available at launch, but that MusicNet would provide as many as 100,000 tracks to start.
Edward Murphy, president and chief executive officer of the "National Music Publishers' Association (NMPA), said some progress was being made in the ongoing negotiations.
"We're all working toward a goal. It could happen quickly, but it hasn't happened yet," he said.
