p2pnet - rss feed: Private firm buys MusicNet
p2pnet.net News:- The Big Music cartel is using its many and various alphabet organizations to tell the world the corporate online music business is doing wonderfully. Which it isn’t. In fact, it wouldn’t exist at all were it not for Apple’s iTunes which, although it went up in 2003, is barely breaking even. But that’s fine because it’s more of a loss leader for iPod than anything else.
Be that as it may, “Legal online music services have experienced exponential growth in the last year, with music fans downloading well over 200 million tracks in 2004 in the US and Europe - up from about 20 million in 2003,” says the cartel’s IFPI (International Federation of Phonographic Industry).
It fails to point out that the sales are almost wholly down to Apple which is, in fact, claiming 350 million in sales, not 200 million.
“The number of online sites where consumers can buy music legally is now well above 150 in Europe and over 230 globally, up from only 50 a year ago,” it says, again failing to mention that without Apple, there’d be no corporate sites worth mentioning.
Nor does it include details of what’s happening in the real world of online music where, Hollywood fairy stories to the contrary notwithstanding, file sharing and the use of the p2p networks continue in an upwards spiral.
But for the sake of argument, let’s say the labels’ claims are true – that the corporate online stores are doing gangbuster business.
Why, then have cartels members BMG, EMI and Time Warner sold MusicNet, which they owned jointly with RealNetworks, to Baker Capital, a private New York investment firm?
Not that they did too badly, all things considered.
“The purchase price was not announced, but people involved in the transaction said it was just under $30 million,” says the New York Times, which also has the answer.
When the company was formed in 2001, BMG, EMI and Time Warner owned music labels. But BMG and Sony teamed up to form Sony BMG and Time Warner sold Warner Music to an investor group led by Canada’s Edgar Bronfman jnr.
“As a result, most of the shareholders had little strategic reason to nurture MusicNet, and the company has struggled to get the cash it needs to operate. MusicNet lost $10 million to $12 million last year, people involved in the company said," the NYT continues.
MusicNet at first offering allowed users to download an unlimited number of songs and play them on their computers for a fee, usually under $10 a month, but, "It did not offer a music service directly to consumers, but provided technology for others to do so, including America Online and the Virgin Group,” says the post.
Then Sony and Vivendi Universal’s UMG started PressPlay as a competitor and eventually, “all the labels agreed to support both services and some others that began to emerge,” says the NYT, pointing out that ultimately, the company that “took the name of Napster” bought it.
However, “the subscription concept did not gain wide consumer acceptance,” a reality Napster has still failed to grasp.
Baker hopes to resuscitate MusicNet by, “becoming involved with music services that will be introduced in coming months from Yahoo and Viacom’s MTV Networks,” says the NYT, adding:
“And it will introduce new technology that will allow users to download songs onto portable devices, although not onto Apple’s iPod.
Baker Capital partner Jonathan I. Grabel, is quoted as saying games, video and ring tones are on the horizon.
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See:-
New York Times - Private Investment Firm Buys MusicNet Venture, April 14, 2005
failed to grasp - Napster year-end numbers, p2pnet, April 8, 2005
bought it - Napster back. Again, p2pnet, 2003
