Music industry behemoths get together to launch music subscription service

In a widely anticipated move, RealNetworks on Monday formed a pact with media giants AOL Time Warner, Bertelsmann and EMI Group to bring about a new music subscription service online, dubbed MusicNet.

Under the agreement, AOL Time Warner, Bertelsmann and EMI will each own a minority stake in MusicNet, and the companies' record labels will each separately license their music to the new venture. MusicNet, which will operate as an independent company, will offer a wide collection of downloadable and streaming music backed by RealNetworks? core streaming media technology.

Financial terms of the agreement and the investments were not disclosed.

The move underlines the need for many music companies, largely big record labels, to address growing consumer demand for online services that offer legal digital music that are affordable and easily accessible. RealNetworks' MusicNet service appears to be a serious contender to become one of the first, if not the very first, subscription service offering access to a large part of the major music labels' content.

The agreement also comes as Congress sets off hearings this week to discuss online copyright issues and help push progress in the online music business. The sessions begin Tuesday in the Senate Judiciary Committee.

RealNetworks, which will also own a minority stake in the company, said MusicNet will act as a technology provider as well to other companies wishing to sell music subscription services under their own brands. MusicNet will initially license its technology to AOL and RealNetworks. Both AOL and RealNetworks intend to launch branded online subscription services later this year.

Additionally, MusicNet plans to license its service to other secure and legal outlets, including file-swapping music service Napster.

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