All "Big Five" labels, Madonna back Listen.com

All of the "Big Five" record labels and Madonna's Maverick Records have invested undisclosed sums in Listen.com, the San Francisco-based start-up plans to announce today. Listen.com's directory categorizes more than 500,000 MP3 music tracks that are available for download across the Web.

BMG Entertainment, EMI Recorded Music, the Universal Music Group and Warner Music Group have placed new stakes in the company, and Sony Music invested in it last fall.

Listen.com presents an interesting proposition for the established record labels. Although the labels are finally positioning their weaponry to address consumers' growing interest in building digital music collections, collectively the majors have been skittish of the MP3 format, which employs no security measures to curb piracy.

In fact, the labels' primary trade group, the Recording Industry Association of America, has filed lawsuits in the past two months against MP3.com and Napster, companies it alleges are facilitating piracy via the Net or illegally making digital copies of CDs.

That said, MP3s are where the action is in the Net music sector. And Listen.com only points online users to legal MP3s, meaning its directory is dominated by independent artists.

Listen.com is trying to position itself as a Net company that will survive the online music shakeout no matter which music encoding formats, portable players or content sites become the market leaders.

"Having all five major labels as investors means that Listen.com is now clearly positioned as the platform for discovering digital music," Rob Reid, Listen.com's CEO, said in a statement. "These investments in Listen.com are also another significant sign that the entire music industry will be moving aggressively online this year."

Listen.com's music reviews and search features already appear on most music download sites, such as MP3.com, EMusic, Excite, Lycos and RealNetworks. The company also sponsors live performances in major metropolitan cities

The labels' financial confidence in Listen.com is a concession to the MP3-dom of the Net, but it's also an endorsement of companies that are working to protect their coffers. The labels praised Listen.com for promoting "legitimate" music.

In tune with its current business model, Listen.com will get a cut of any future digital music sales it generates when visitors leave its site and buy from the Big Five.

"BMG's partnership with Listen.com reflects our desire to support those companies that are working to build a legitimate market for digitally delivered music," Kevin Conroy, senior vice president of BMG Entertainment's worldwide marketing and new technology, said in a statement.

(Halsey Minor, CEO of CNET, News.com's publisher, is an investor in Listen.com).