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BMG, Universal announce online music deal

Two of the world's leading music companies boost their online efforts--in the form of a Net music agreement.

BMG Entertainment and Universal are the latest entertainment giants to boost their online efforts--in the form of a Net music agreement.

At a news conference this morning in New York City, chief executives of the two companies announced a new Internet alliance to create Web communities for music fans, promote artists, and sell CDs online through a venture to be known as GetMusic, which will consist of music channels and an e-commerce site, getmusic.com.

Due to launch later this year, the channels will build on the foundation of BMG's existing genre-based music Web sites, introduced in February 1996.

"The time is right for BMG and Universal to create the most compelling online music communities, build strong bridges between artists and music lovers, and make music available to consumers with a simple click of the mouse," Strauss Zelnick, president and CEO of BMG entertainment, said in a statement. Each of the new channels will also feature lifestyle and interactive content. The initial focus will be on the North American market, and plans are ongoing to expand globally, the companies said.

The move comes as many offline media firms are turning up the heat on their online efforts, and those that aren't have become the subject of much speculation. Disney, for example, brought all its offline content units under one umbrella with its Go Network, while Viacom is planning to launch two "destination" sites, one for children and another for music fans. Meanwhile, observers have wondered what media giants such as Sony and Time Warner plan to do for their Internet pushes.

At the same time, the mainstream music industry is under intense pressure to take strides on the Net, as the MP3 format has taken off in popularity and led to the spread of unauthorized copies of copyright-protected songs online. Many analysts have noted that the record labels need to jump on the music download bandwagon swiftly and offer compelling content for download in order to steer fans toward authorized, for-fee music online.

Once rolled out, the new channels will cover such genres as R&B and hip-hop, on www.peeps.com; alternative, on bugjuice.com; country, on twangthis.com; rock, on rockuniverse.com; and adult contemporary, on connect2music.com.

In addition, getmusic.com will offer a full range of music from most major labels, with more than 250,000 albums from which to choose.

BMG and Universal plan a number of initiatives to drive traffic to these sites, using both online and traditional marketing tools, including print and broadcast advertising, printing URLs for the appropriate sites on CDs, and "connected CDs" that, once loaded into a computer, will launch users directly to the artist's site and special events.

Universal is the world's largest music organization, with Seagram's $10.4 billion purchase of PolyGram last year. Its roster includes the likes of Elton John, Herbie Hancock, and U2. Its labels include Def Jam Records, Geffen, and A&M.

BMG owns more than 200 record labels in 53 countries, including Arista Records, RCA Records, and Ariola Music. It also owns the world's largest music club. BMG sells compact discs and tapes online at its Web site.

Yesterday, America Online said it is not planning to make an announcement, dispelling stock market speculation it was involved in the announcement. Market rumors have been flying in recent days that AOL could be gearing up to acquire television broadcaster CBS.

News.com's Dawn Kawamoto contributed to this report.