RealNetworks Enters Music License Talks


In the latest step toward developing online music subscriptions, three big record companies are negotiating to license their music to RealNetworks Inc. for use in its planned subscription service, tentatively called MusicNet, Friday’s Wall Street Journal reported.

According to people familiar with the talks, AOL Time Warner Inc.’s (AOL) Warner Music Group, Bertelsmann AG’s BMG Entertainment and EMI Group PLC each are negotiating with Seattle-based RealNetworks, which makes a popular program for tapping into Internet music and video broadcasts from personal computers. RealNetworks (RNWK), which already owns the Web address MusicNet.com, is offering an ownership interest in the planned subscription service to the record companies.

One of the proposals under discussion is for MusicNet to be made available to other online services. In what is likely to be a controversial aspect, the companies also are discussing giving renegade Web site Napster an opportunity to license the service under certain strict conditions. Napster, which operates a hugely popular music file-sharing service, is under court sanction to block access to illegally copied music. It has been trying to develop a legitimate service, but most of the big record companies have refused to negotiate licensing deals until Napster stops offering pirated music.

It isn’t clear that the MusicNet proposals would necessarily change anything for Napster. The record labels long have expressed a willingness to enter into deals with Napster, but only if the company can prove it has security measures that block access to illegally copied music. A Napster spokeswoman declined to comment.

RealNetworks and the three record companies are hoping to conclude a deal by next week, but there is no guarantee that an agreement will be reached. A spokesman for RealNetworks declined to comment on MusicNet, though company executives have said in the past that RealNetworks is in ongoing discussions with the recording industry about alliances.

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