EMI and HitHive will begin testing on a limited basis the service allowing users to download and share some digital music files, using a patent-pending technology by HitHive called Loan and Borrow, EMI spokesman Richard O'Brien confirmed. He declined to disclose any financial terms of the agreement.
The system aims to control sharing of copyrighted material by letting users digitally receive EMI copyrighted music from the HitHive Web site or from another user, letting the user listen to the music through their PC or wireless device for a limited number of plays, and then giving that user the option of buying the song or album, EMI and HitHive said.
The HitHive system also allows those who buy music to store, manage and play music from any Web-compatible device, the companies said.
EMI has been stepping up its efforts to get digital music distributed over the Internet. On Monday, EMI, Bertelsmann and AOL Time Warner announced a deal with RealNetworks to launch a platform for online music subscription services called MusicNet. MusicNet will combine the music assets of the music labels' subsidiaries -- EMI Recorded Music, BMG Entertainment, and Warner Brothers Music Group -- which will each license their music to MusicNet on a nonexclusive basis while RealNetworks will provide the online music delivery technology. AOL will also tie the new company into its existing portfolio of online brands, which include the music sites WinAmp and Spinner.
EMI is also working on launching its own subscription-based digital music service, which is "about ready for a European rollout," said Fergal Gara, the director of new media for EMI UK this week at the DDMI (Digital Distribution and the Music Industry) Global Europe 2001 music conference in London.
"I think peer-to-peer has good marketing and promotional benefits and the challenge for all of us is to figure out at what stage do consumers put a value on digital services? EMI is a company with interests in over 50 new media companies but we haven't gotten the hype that MP3.com and Napster have received. There is now a movement (in the music industry) away from product towards services but our biggest slowdown in the rollout (of our subscription-based digital music service) has been a lack of interest by our distributors," Gara said.
Because traditional music retailers realise that digitally-distributed music will initially make up a very small percentage of the music market, they are not keen to partner with the labels to invest the large amounts of capital needed to establish secure systems for digital distribution, Gara said. Therefore, EMI has been turning to small start-up companies -- like HtiHive -- to make the initial investments in digital music distribution.
"We will participate other companies for distribution, for a number of reasons. The role of aggregator is alive and well because 99 times out of a 100, the consumer doesn't know or care what label an artist is on," Gara said.