HITS Daily Double
When a court-ordered shutdown forced Napster into limbo, observers wondered if the brand name alone would be sufficient to recover for lost momentum and bring back the kids.


HITS Techno-Geek Sums It Up,
But What Does It All Mean?
If last year's digital-music soap opera could be summed up by litigation and angst over Napster, the fateful saga of 2001 has largely been dominated by the majors' first serious moves into the digital space.

Acquisition of key online successes and sub-service alliances have grabbed most of the headlines, though the file-swapping overload represented by Napster's decentralized descendants Morpheus, Grokster, KaZaA, Gnucleus, LimeWire, Gnotella, et al. (most face litigation from the RIAA, MPAA, et al.) remains a source of much hand-wringing.

The majors' official sub-service entities were the subject of considerable ink, with MusicNet bowing to decidedly mixed reviews via the RealOne service (AOL's version is now in beta) and Pressplay on the launchpad as we go to press—and feuds a-brewing with artists and management over rights and compensation. But despite sniping from the sidelines before they even get their shot, these projects only represent an early foray into one corner of the space.

More to the point, Vivendi Universal acquired MP3.com, GetMusic (into which Farmclub.com was folded), EMusic and other digital music properties. Late in the year, the company announced its combined Web holdings (which also included individual labels' sites, of course) would form the basis of the Vivendi Universal Net USA unit and placed MP3.com chieftain Robin Richards at the helm. Richards, who had succeeded Michael Robertson at the netco, promised VU's various online businesses would provide a streamlined and cost-efficient network for advertisers.

VU thus prepared to do battle with AOLTW, which during '01—under the supervision of AOL Music head Kevin Conroy—seriously ramped up its music offerings and leveraged same in the brokering of massive "convergence" ad deals with corporate clients.

While AOL is still proving itself in the eyes of the biz as a means of driving sales, Conroy's commitment to a music "environment" that grows at the speed of actual, measurable public interest looks eminently sensible.

Bertelsmann, meanwhile, which had made much of its intention to outpace its ostensibly stodgier rivals in the new-media sphere, stumbled noticeably in taking up Napster's banner. The move was expensive not only in outlay (though the German conglom has massive cash reserves) but in goodwill at label unit BMG.

Konrad Hilbers took the reins at the infamous swapco and promised a legit version—minus most of the features that made Nappy popular in the first place but with some licensed content from the MusicNet partners and indie labels. When a court-ordered shutdown forced the P2P pioneer into limbo, observers wondered if the brand name alone would be sufficient to recover for lost momentum and bring back the kids.

But Bertie chief Thomas Middelhoff still had other pieces on the board. Acquisitions like locker service Myplay were added to CDNow and BMG Music Service as Bertelsmann eCommerce Group was folded into the more succinct BeMusic. When digital point man Andreas Schmidt ankled during the holiday season, Stuart Goldfarb stepped in to head BeMusic—which in turn reported to DirectGroup Bertelsmann. Still keeping up? Good; maybe you can explain it all to me.

Net radio suffered, if anything, an even bumpier road. Licensing squabbles with rights holders—especially publishers—raised uncertainties about the future of the medium, though a tentative agreement (pending U.S. Copyright Office action) between webcasters, publishers and performance rights orgs at least provide a framework for a compulsory license for programmed outlets. On-demand services, it appears, are unlikely to enjoy the same advantage. Ultimately, though, the big players will probably have the lead in this space as well—at first, anyhow.

Thanks to all of you who slogged through the year's cyber-speak and offered feedback. If you need me over the holidays, I'll be in the hammock—so hit me on the mobile thingie: [email protected]