SAN FRANCISCO — Three of the world's largest record companies said Monday that they had struck a deal with RealNetworks, the Seattle-based Internet audio and video distribution company, to make music available online based on a subscription model.
The announcement between Bertelsmann AG, EMI Group PLC, AOL Time Warner and RealNetworks occurred after the music industry had spent months asserting it would move toward a subscription model. Monday's agreement would have the music companies take minority positions in a company called MusicNet that was created last year by RealNetworks.
Analysts noted Monday that the deal was short on details and that there as yet was little proof that Internet aficionados who are now being weaned from Napster's free music model, as a result of a federal court ruling, would be willing to pay monthly fees.
Monday's announcement was for what the companies called a licensing "platform" on which not just one, but many, subscription-based services could be offered.
The platform, intended to be licensed by online music businesses, including Napster, would ultimately let consumers pay a flat fee — likely per month — to download songs drawn from a large music catalog.
Executives from the three major record labels are calling this a breakthrough in their long-anticipated efforts to move onto the Internet.
"We think this is Day 1 in the sort of building an Internet distribution model that is safe and legal for the mass market," said Dick Parsons, co-chief operating officer of AOL Time Warner.
Implying that the new fee-based distribution service would be greeted eagerly by the millions of users who have until now freely traded MP3 copies of songs via services such as Napster and Gnutella, Jay Samit, senior vice president for new media at EMI said, "Finally, with this technology and with collection of catalogs, we've gone a long to making buying music easier than stealing music" over the Internet.
Details of the proposal remain undisclosed, if not uncertain. Neither the record companies nor RealNetworks have disclosed what the subscription models might look like, how much the service will cost, or the extent of the music that will be available.
Missing from Monday's announcement were Sony and Universal, which together have about a 40 percent share of the U.S. recording distribution market. The two companies announced last year that they were planning their own Internet service, called Duet, which is set to begin this summer.