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MP3.com recasts as music "infrastructure" company

CEO Michael Robertson lays out the skeleton of a plan that could turn the music company's focus into something far more ambitious than its online music-portal roots.

SAN DIEGO--Riding the tide of a pair of major-label music licensing deals that have helped lift some of the clouds from its future, embattled online music company MP3.com has a new message for the world: It's an infrastructure company now.

At its annual MP3.com summit in San Diego this week, CEO Michael Robertson laid out the skeleton of a plan


Dataquest analyst Sujata Ramnarayan says that repositioning itself to provide other services can give MP3.com a long-term future in the online music business.

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that could turn the music company's focus into something far more ambitious than its online music-portal roots. The company is aiming to provide technology services built directly into a new generation of music software and hardware--all of which, Robertson hopes, will in turn point to MP3.com's service.

"What you see being born here is an operating system for music," Robertson said. "We're a utility company. But we deliver music instead of water or electricity."

Scattered around the event are a few early examples of what Robertson and other online music sites hope will be the future. Home-networking hardware company Panja has made a link to MP3.com's music content its main audio service. Digital jukeboxes here played tunes downloaded from the Net, while software companies showed off links directly to the music portals.

The infrastructure drive is a different--and far more focused--message for the company compared with those at its previous two annual meetings. As recently as last year, the dominant theme was the potential of digital music to overthrow the established entertainment order.

This week's meeting is far more subdued, as online music distribution and technology companies increasingly tone down their revolutionary rhetoric and look for ways to work with record labels.

Robertson's infrastructure theme mirrors that of many other Internet companies looking to become application service providers, or companies that provide access to software over fast Net connections. MP3.com has even adopted this nomenclature, dubbing itself a "music service provider."

To this end, the company today released an "open" set of tools that will allow outside software, hardware or Web companies to link their services directly into MP3.com's databases. If Sony wanted to build a stereo component that allowed listeners to pull MP3 songs directly from the Web, for example, it could draw on the company's protocols to allow push-button access to an individual's MP3.com-hosted music collection.

Software companies or Web companies also could draw on the links, the company said. Robertson even demonstrated a way to tap into the system over an ordinary telephone line, in much the same way that Tellme Networks and its rivals provide access to Web-like content over phone lines.

From a business perspective, the drive adds a potentially valuable new set of customers for MP3.com---as long as it can ensure access to all or most of the music that listeners want. If a link to MP3.com's database is built directly into a home stereo system, the company could entice listeners to use its service, even if they've never visited the Web site itself.

Others in the industry see news analysis: MP3.com's practices stir debatewelcomed the effort, saying that bringing MP3 access to stereo systems, telephones and radios would help raise the profile of the entire digital music business. But focusing on MP3.com as an "operating system" for an entire industry, rather than as one of a myriad of Web sites, would be a mistake, some cautioned.

"If you're going to build something and say it's open, but it points to just one provider, then it's not open," said Brian Zisk, director of business development for iCast, a CMGI-affiliated Web broadcasting company. "It's like an affiliate program for one provider."

The technology for pointing hardware devices to playlists such as MP3.com's isn't difficult to translate to other Web sites, engineers noted. A programmer who worked on the link between Panja's home stereo box and MP3's site said that a similar link could be made to any Web address, without the help of MP3's open technologies.

Other sites will simply need to step up and build their own relationships with software and hardware vendors, rivals said.

"This system is ubiquitous MP3.com access," said Robert Kaye, an EMusic.com programmer who works on the company's FreeAmp MP3 player. "What we need is ubiquitous access."

In the meantime, what MP3.com needs is more content--and more deals with record companies. But that's coming. In addition to its high-profile settlements with Time Warner's Warner Music Group and Bertelsmann's BMG Entertainment, the company today announced a licensing deal with independent label Beggars Group, which owns the Beggars Banquet and 4AD labels, among others.

The company has yet to settle with Universal Music Group, EMI Recorded Music and Sony Music, all of which are still suing MP3.com for copyright infringement. Deals are expected, but they could require Robertson's company to pay as much as $100 million in settlement fees, according to some reports.