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Universal licenses music catalog to digital encoder

The record label signs a licensing deal with digital media company Loudeye Technologies to digitally store and encode its entire U.S. active catalog of audio and music video titles.

Seagram's Universal Music Group announced today it has reached a licensing agreement with digital media company Loudeye Technologies to digitally store and encode its entire U.S. active catalog of audio and music video titles.

As previously reported, Loudeye said it will begin streaming 30- and 60-second promotional audio and video clips from the Universal catalog. The company added that it eventually plans to host uncompressed versions of some 14,000 Universal audio tracks and 30,000 music videos, which it will redistribute to third-party vendors in popular streaming and download formats.

"We'll be storing 150 terabytes (of data)," said Martin Tobias, Loudeye's chief executive. "Between us and the U.S. Department of Defense, there's nobody else who comes close" to that capacity, he quipped.

Terms of the deal were not disclosed.

The arrangement promises to streamline the process of creating versions of Universal tracks for online digital sales. Loudeye will provide custom formatting for vendors, including links to CD art and "metatags," which provide information about the artist and song titles for the purpose of tracking sales.

Loudeye's competitors include Sonic Foundry, which has also signed deals with big content companies including Sony, Warner Bros. and BMG Entertainment.

Loudeye, which went public in March, has deals to convert content for several media and entertainment companies, including AtomFilms, BMG, EMusic, EMI-Capitol Music Group, Sony, Warner Bros. Online and Universal. Today's deal is its first major foray into hosting content.

The deal is an important win for Loudeye and signals an endorsement of digital music distribution by the giant record label.

The music industry has been slow to embrace the Internet but has begun to move more quickly in the wake of the merger proposed in January between America Online and Time Warner. The deal, which could bring together two of the largest record labels with Warner Bros.' proposed purchase of EMI Recorded Music, has put the issue of convergence between old and new media companies on the front burner.

All of the major labels have announced online distribution plans, although none has moved beyond the experimental phase.

Seagram chief executive Edgar Bronfman Jr. in March said Universal would begin offering a limited selection of its catalog for download from its Global E Web site. It has also unveiled a series of online partnerships, including a deal with start-up Musicbank, which plans to launch an Internet music "locker" service allowing CD buyers to listen to online versions of songs they've purchased.

The label has aggressively asserted its copyrights online, remaining the sole plaintiff to go to trial in a lawsuit brought by all five of the major recording companies against MP3.com over its music locker service, dubbed My.MP3.com.

A federal judge earlier this month found that MP3.com willfully infringed Universal's copyrights and ordered the company to pay $25,000 for each violation--a judgment that could force the company to shell out as much as $250 million. The tally will be determined at a court hearing later this year.

Universal characterized its deal with Loudeye as a significant step further into the digital waters.

"Having Loudeye host and stream (Universal's) audio and video clips enables (Universal) to further market, promote and drive sales of our artists' music over the Internet," Larry Kenswil, president of Universal's eLabs online division, said in a statement.