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Internet signs fourth label deal

The deal temporarily gives the online music company access to more music than rivals MusicNet and PressPlay--and the race to get all five major labels is on.

Online music company has won permission to include music from record label Time Warner in its new subscription service.

The deal temporarily gives access to more music than its major label-backed rivals, MusicNet and PressPlay. All three are competing for a share of the nascent music subscription market.

As yet, hasn't made considerable strides in securing distributors for its service, having signed up only Internet service provider among its corporate customers. By contrast, MusicNet is distributed on America Online and through RealNetworks' software, and Pressplay can be found on Yahoo and Microsoft's MSN.

Nevertheless, reaching four of the five big music labels' content is a good sign for the small company's service as it tries to outstay its bigger rivals.

"This puts them out ahead of everyone else," said P.J. McNealy, research director with GartnerG2, a division of the Gartner research firm. "It helps along their business model--and helps anyone in digital music--to get closer to five" label deals.

The race for the most music today still has little to do with who will cross the finish line first, however. Analysts say that the music subscription services will take years to reach the mainstream and won't start bringing in appreciable revenue until 2003 at the earliest.

None of the services have yet released subscriber figures. All three released early versions of their services in late December, but the companies have been upgrading content and features quietly since.

Other independents are also in the game. FullAudio, which also has rights to several labels' catalogs, will see its subscription service on Clear Channel radio Web sites. Rioport is also offering a service which will allow downloads of music onto MP3 players. continues to go through hard times as it hunkers down for months more without appreciable revenue. Although a representative said the company still has considerable cash on hand, the company recently laid off several people and instituted an across-the-board pay cut.

"We still have a lot of money in the bank," spokesman Matt Graves said. "That had everything to do with controlling costs for the company."