Music Takes Digital Control
Battle-weary music industry bypasses Napster and YouTube and channels directly to
fans.
October 19, 2006
The music industry will attempt to
rehabilitate its rocky relationship with the Internet by bypassing troublesome middlemen,
such as Napster and YouTube, and communicating directly with its legion of music
and music-video fans.
Universal Music U.K. said Thursday
it will test a set of branded Internet broadcast channels through which the company
and its artists will deliver music, video, concert footage, and behind-the-scenes
chats directly to PCs, PDAs, cell phones, and other digital media devices.
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The move is a significant departure
for a music content owner like Universal Music, which intends to roll out the broadcast
network beyond just the
Music companies have traditionally
communicated with consumers through radio and TV. Music content owners have participated
in an ongoing, mutually beneficial relationship with the radio industry for more
than 50 years. That relationship has been enhanced by the emergence of satellite
radio.
The industry has also developed close
and profitable relationships with music-oriented TV networks such as MTV and VH1,
and popular music-based TV shows such as American
Idol. Performers and TV hosts move seamlessly across a nonexistent music-TV
divide.
Combative Digital Relationship
But no such seamless relationship
exists in the digital world. The industry’s relationship with Internet-based middlemen
such as the P2P file-sharing firms and the online video companies such as YouTube
has been problematic and adversarial, to say the least.
The industry has also had a combative
relationship with Apple, which has been criticized for its pricing inflexibility.
“The software and hardware industries
have used the music industry’s content to accumulate billions in market cap on the
backs of everybody from Shania Twain to Mariah Carey,” said Robert Kelly, chief
executive of WWEBNET (World Wide Electronic Broadcast Network), the company behind
the broadcast channels.
Five-year-old WWEBNET has more than
70 contracts with entertainment companies, including all of the major music labels.
“The music industry understands that
if they don’t get control of their consumer networks and their digital distribution,
they can get gobbled up by the likes of Google, Apple, and Microsoft,” he added.
Feeding at the Revenue Trough
The music-Internet relationship has
played out in
Radio and TV provide the music industry
with an avalanche of free publicity without feeding from the industry’s revenue
trough. The industry claims that music file-sharing firms such as Napster compete
with them directly.
The music industry continues to wallpaper
the landscape with lawsuits in an effort to deter fans from illegally downloading
its music, and online video enthusiasts from using its video content without permission.
But the industry is also casting
about for technological accommodations on the web through which it can better protect
its content from pilferage, and Universal Music’s latest direct-to-consumer broadcast
channels are the latest vehicles.
Taking Control
The technology behind the broadcast
channels comes from City-based WWEBNET. It is a hosted service that delivers multimedia
content directly to the fans’ PCs or other devices.
The users download and install the
channel application on their digital devices, and a resident desktop icon alerts them when new content is added.
WWEBNET operates the system, but
it appears to the consumer as a Universal Music-branded product. The system has
e-commerce, content management, and advertising capability built in.
“Entertainment companies can distribute
content or advertising on a worldwide basis,” said Mr. Kelly. “This is a sea change
for entertainment companies. This gives them the ownership of their distribution
network and direct access to advertising revenue generated around content distribution.”
Contact the writer: CMedford@RedHerring.com