The partners' point of convergence is a new Universal record label called Jimmy and Doug's FarmClub--as in Jimmy Iovine, cochairman of Universal's Interscope Geffen A&M banner, and Universal Music chairman Doug Morris. Iovine has been tapped as chairman of the label.
A representative for Universal parent Seagram declined to comment, but sources said the label, housed at FarmClub.com, lets unsigned artists digitally submit recordings for fans and industry executives to critique. Anyone who uploads music can compete for a major recording contract, and Universal Music will market and distribute selected FarmClub releases using both the Internet and traditional channels.
As part of the process, artists who turn to FarmClub will be in the running to appear on a new weekly TV show on the USA Network. The hour-long program will follow the World Wrestling Federation's Raw, the cable network's highest-rated show. The program will be linked to the FarmClub Web site.
In exchange for a 3 percent stake, AOL has provided about $100 million in promotion for FarmClub on its welcome screen and main music sites.
The agreement allows Universal Music to connect directly with music fans and provides a new stream of revenue from advertising on FarmClub. It comes as Universal and other major music companies are struggling to take a threatening new medium and turn it to their advantage, or at least to stem potential losses from competition on the Net, where consumers can download music for free.
Last spring, Universal teamed with Bertelsmann's BMG Entertainment to launch Getmusic.com, an e-commerce site that sells CDs and cassettes and directs customers to nearby retail stores. It also offers online communities and a group of sites for various music genres.
Columbia House, the Time Warner and Sony-owned venture, has agreed to buy online retailer CDNow.
Bronfman, Time Warner CEO Gerald Levin, and other executives have consistently described the new landscape as full of opportunity for the traditional music giants. The industry, they say, and their companies' bottom lines have always benefited from technological advances in the past.
But many in the industry are worried the Internet will steal some business. Music companies may make it up, and in spades, with their own online ventures, but it's not yet clear just how.
All of the major music companies are involved in initiatives to prevent pirating of music sold on the Web, including the industry-wide Secure Digital Music Initiative.