Sony becomes the fourth major record label to strike a licensing deal with the San Francisco-based online start-up. Musicbank last week inked a similar deal with Warner Music Group, and it has agreements with BMG Entertainment and Seagram's Universal Music Group. Of the Big Five labels, only EMI Recorded Music remains unsigned.
Musicbank is courting the major labels to create a free service that lets Net users listen to songs online. But the attempt may be risky given the high price tag for licensing songs from the labels and the company's reliance on selling advertising on its site. Although terms of the Sony agreement were not disclosed, previous terms involved payment to the labels on a per-stream basis.
Through a password-protected account with Musicbank, people who visit the site can listen to music they own from any computer without needing the CDs. Consumers can load a CD into a CD-ROM, which then acts as a key to let them listen to those songs on their computers. The company also has a deal with retailer Virgin Megastores whereby people can automatically listen to their CDs through Musicbank after they purchase them in the store.
Record labels have endorsed Musicbank mainly because of the licensing deals. The record industry has guarded the distribution of copyrighted works online and has taken swift legal action against companies that it alleges have violated its intellectual property by promoting infringement of artists' work.
The record industry is engaged in a heated court battle against Napster, a software product that lets people swap files encoded in MP3, a popular audio compression format. The record industry has also won a major lawsuit against online music service MP3.com; the company's My.MP3.com product offered a service similar to Musicbank's, but MP3.com did not enter any licensing agreements to stream copyrighted songs.
Musicbank said it plans to launch by the end of the year but did not specify when.
"Our agreement with Sony Music Entertainment brings us closer to our goal of providing consumers with immediate, customizable access to their personal music collections wherever they are, from any Internet connection," Musicbank chairman Pierce Ledbetter said in a statement.