AT&T Enters Digital Music Fray

Going head-to-head with competitors in the bid for dominance of online music distribution, AT&T Corp. has teamed with Matsushita Electric Industrial Co., BMG Entertainment and Universal Music to develop technology needed to download, play and store digital music from the Net.

The new Electronic Music Distribution (EMD) will provide a secure system for downloading music for playback on PCs, DVDs and portable players. In an effort to heighten consumer interest in music and the musicians who create it, the companies said they also would offer videos, lyrics, graphics and links to Web sites. EMD will bring considerable marketing clout and customer reach: Universal and BMG, a unit of Germany’s Bertelsmann AG, share more than 40 percent of the U.S. CD and tape market. AT&T boasts extensive broadband and narrowband distribution. Matsushita Electric is the world’s largest consumer electronics company and a trailblazer in the transition to digital consumer electronics. A New Economy “Creating a networked digital music industry is akin to creating a new economy,” said David Nagel, AT&T Labs president and chief technology officer. “We need to work together on the infrastructure … so that a the new economy of digital music distribution can achieve explosive growth by creating a much better consumer experience.” Added Doug Morris, Universal Music Group chairman and CEO: “We are on the verge of a whole new world where consumer access to music will become virtually instantaneous” All four companies said they would adhere to the Secure Digital Music Initiative, the far-flung, recording industry-led effort to set digital music distribution standards. Competition Growing EMD will strive to unseat MP3 as the leader in online music distribution. MP3 has been at the center of controversy pitting the multi-billion music industry against the Internet entrepreneurs who saw a way to bring music and the musicians who make it directly to the online public. Many have predicted its demise, but the technology and the amount of musicians offering it continue to grow. Others have built strong presence as well. Tunes.com already has more than 1,000,000 unique users and it looks to grow rapidly. The CD player that comes with Windows 98 is full of links to appropriate parts of Tunes.com. Also, RealNetworks and IBM announced a partnership to create a universal standard for digital distribution of music. It will integrate RealNetworks’ client technology and encoding tools into IBM’s Electronic Music Management System (EMMS), developed to prepare and distribute digital content, including music. About the Players AT&T Corp. serves more than 80 million customers, including consumers, businesses and governments. With annual revenues of more than $53 billion (US$) and 140,00 employees, AT&T provides services to virtually every country and territory around the world. BMG owns more than 200 record labels in 53 countries, including Arista Records, RCA Records and Ariola Music. BMG also owns the world’s largest music club, one of the world’s largest music publishing companies, and has interests in home video, television, and compact disc and cassette manufacturing. Matsushita Electric Industrial Co., Ltd. (NYSE/PCX:MC), based in Osaka, Japan, and best known by its Panasonic brand, has more than 275,000 employees worldwide, with overseas operations that include over 220 companies in 46 countries and regions. Universal Music Group, a unit of The Seagram Company Ltd., a global entertainment and spirits and wine company, is the world’s leading music company with wholly owned record operations or licensees in 59 countries around the world. more than 200 countries and employs more than 330,000 people worldwide. UPS reported 1998 annual revenues of $24.8 billion.

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