Universal-BMG ink GetMusic.com joint venture

Computergram International, April 8, 1999

By Nick Patience

International music heavyweights gathered in Manhattan yesterday for a lightweight announcement, 'revealing' that Bertelsmann AG's Bertelsmann Music Group (BMG) will continue operating its GetMusic.com website and its various offshoots - only from now on it will be done in a joint venture arrangement with Seagram Co Ltd's Universal Music Group. Universal is the largest record company in the US in terms of sales and BMG is number two. Neither company would reveal any terms of the deal or comment on how much they expect to make out of the venture.

The various off-shoot sites, such as peeps.com, bugjuice.com and twangthis.com will be enhanced with community-building tools designed to encourage repeat visitors, such as contests, chat, exclusive interviews, backstage footage. More importantly, the pair will expand the use of connected CDs, which when put in a PC, will take the user to the sites, driving traffic to the sites. The deal is primarily for content creation, with both sides providing "unprecedented access" to their roster of 200 or so artists, which include the likes of Beck, Sheryl Crow, Hanson, Whitney Houston, Puff Daddy and U2. Other music content sites have to "scrounge the content," to produce similar material, said Larry Kenswil, BMG's president of global e-commerce and advanced technology.

GetMusic.com is a general music retail site competing with CDNow Inc and Amazon.com Inc, featuring artists from numerous record labels - not just the ones owned by either BMG or Universal. However, at present the announcement is more puff than Puff Daddy as the sites are far from complete. A relaunch is planned for late summer said Kenswil. Prices will be "competitive," compared with other web music CD retailers, said Seagram CEO Edgar Bronfman.

There was no mention of MP3 or music downloads in any form yesterday, except to say that the two companies are considering them at some point in the future. The sites do include audio and video clips, but that's as far as they are prepared to go at the moment. MP3 is the free music download format that is quickly being adopted around the world by seemingly everybody apart of the majority of the recording industry, which is developing its own rival technologies instead. Kenswil said this announcement is "much broader than that" - referring to direct delivery of music over the web, but he did say that the web site would be "one of several ideal platforms" for launching such a service.

BMG launched its online music presence three years ago with peeps.com, the hip-hop site - or "urban music" as hip-hop is known in politically correct music-biz speak. It has since added country, alternative, rock and "adult contemporary" sites. Universal had no real web presence to speak of and certainly not one through which it could sell CDs. Both companies emphasize that they are not trying to take business away from traditional retail channels and hope that this will encourage the overall sales in the music industry as a whole.

The companies say they are open for other partners to come aboard in the future, but are not taking to anybody right now. Seagram's Bronfman didn't want to comment on plans for GetMusic to be spun out at some point in the future, but Michael Dornemann, chairman of BMG and CEO of Bertelsmann Entertainment Group suggested that it is a possibility: but "we'll let the future take care of itself," he said.

Even though, as Bertelsmann CEO Thomas Middelhoff says, the internet "defies linear thinking," there wasn't much non-linear thinking in evidence yesterday. Are music lovers - at least the ones with self-respect - really going to go to 'official' sites for spoon-fed content? Maybe they will if their connected CDs keep sending them there. The pair thought it necessary to line up the CEOs of not only the record company units, but the parent companies as well - so they obviously thought the announcement was of great importance, even if nobody else did.