Music Hits Broadband Note

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Two music-centered broadband-content plays picked up steam last week, and the developments could factor into cable operators' future modem and interactive digital set-top plans.

MusicNet, the AOL Time Warner Inc.-Real Networks Inc. online paid music venture, named former MTV: Music Television and Video Jukebox Network executive Alan McGlade its president and CEO.

Separately, World Theater Inc. — a relative unknown to the cable industry — announced a music video and audio content deal with Bertelsmann Music Group, one of the five big music labels, under which it would develop an interactive-TV music video and audio service.

MusicNet will provide a platform for music downloading and streaming from Warner Music Group, EMI and BMG. America Online and Real's RealPlayer will serve as platforms, but McGlade will actively seek other distribution partners, which could include other Internet portals, ISPs or cable operators.

Cable's broadband data subscribers are a key target area for MusicNet, McGlade said.

"With my background in cable, I've clearly identified MusicNet as a great service to enhance the offering of high-speed cable modems," he said. "We'll engage in conversations rather quickly with the providers of that service.

"Users will have a great experience with that sort of speed, quick downloads and quality streaming," McGlade added.

MusicNet hasn't set the pricing for its service, but music files will be either streamed or downloaded for purchase or be part of a monthly subscription package. AOL, Real and other online retailers will set pricing, McGlade said.

Real plans to launch the service by Dec. 1.

"I do believe music is a tremendous application to give people a reason to have a high-speed modem service," McGlade said.

But it's also possible MusicNet could wind up on the Scientific-Atlanta Explorer 2000 series of boxes in Time Warner Cable systems.

"We do have an internal initiative to look at set-top boxes as a delivery method," McGlade said.

Advanced boxes with hard-drive storage would be even more alluring because consumers could store purchased music inside set-tops and transfer the content to other devices.

MusicNet will be compatible with Real Player at launch, but McGlade said the service would also eventually work with Microsoft Corp.'s Windows Media Player and Apple Computer Inc.'s QuickTime.

"It's a very interesting blend of technology and entertainment. This business suits my skills and prior experience," McGlade said. "It's going to be an emerging business, and all the rules haven't been written yet."

McGlade will be based in New York, although MusicNet will have a product development team near Real's headquarters in Seattle.

MusicNet will be part of Real Networks' new monthly subscription service, titled "RealOne."

RealOne — the successor to Real's "GoldPass" content service — will be launched in November. More than 400,000 subscribers pay $9.95 a month for GoldPass content, which includes Major League Baseball and National Basketball Association radio feeds and extra footage from the CBS television series Survivor.

Other cable and media content is provided ABCNEWS.com, CNET, Cable News Network, E! Entertainment Television, Fox Sports and The Weather Channel.

For its part, World Theater is building an interactive television music service that will scale across various set-top boxes, president Kelly Sparks said.

"We've designed and built service from ground up" for delivery over cable and direct-broadcast satellite systems, he said.

At one level, the service will be a 24-hour channel dedicated to music videos, specials and series produced by the record labels. Although BMG is the only announced label so far, Sparks said "we're in discussions with all the others."

For more than a year, Universal Music Group — Vivendi Universal S.A.'s record label — has distributed similar content to Excite@Home Corp. cable-modem users and Qwest Communications International Inc. DSL subscribers. Recently, UMG said it will integrate the same content into advanced set-top boxes with the help of sister company Canal Plus U.S. Technologies.

World Theater will do more than allow users to view content or listen to sample songs from albums, according to Sparks. Its electronic-commerce element will let users buy CDs via the TV.

Sparks said he's talked with Liberate Technologies Inc., Microsoft and Open V Corp., as well as development houses associated with the major set-top manufacturers.

Operators would share in World Theater's revenues. "The business model is unique and attractive to the operators," he said.

BMG artists include Christina Aguilera, Toni Braxton, Dave Matthews Band, Dido, Alan Jackson, Carlos Santana and Whitney Houston.

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