Can Virgin Media crack the scourge of piracy with a new music download service?

The cable provider plans to offer customers unlimited streaming and downloading of MP3 music files in conjunction with the world’s largest music company, Universal, home to artists ranging from U2 to Lady Gaga and Willie Nelson. The service, which may be launched by the end of the year, could eventually include music from other major labels.

The idea is to drive back the tidal wave of online piracy, which could appeal to parents worried that their children are downloading contraband music. More than a decade after Napster made a splash by making it easy for users to download music for free, other systems still exist that give Web surfers the same power. Many of those illegally acquired songs are downloaded over cable providers’ systems.

So would you pay $16 to $24, about the cost of two new albums, for a month of unlimited access to music?

Keep an eye on:

• These days, smaller is better in radio (The Wall Street Journal)
• Even Forbes Magazine is pinching pennies (The New York Times)
• BusinessWeek prepares another site redesign (PaidContent.org)

(Photo: Reuters)

It’s Napster’s 10th birthday today. How time flies when you’re disintermediating an industry.

In that short time, the music industry has changed somewhat — somewhat on its head. It all started with Napster’s launch on June 1st, 1999 by college student Shawn Fanning (right, in 2001). The file-sharing service changed the way generations of fans would perceive the value of music i.e., pretty much equal to zero.

In the wake of the original Napster’s demise by way of label lawsuits, there have been scores of digital music start-ups, both illegal and legal, that have tried to replicate original Napster’s popularity. Some have surpassed it in sheer customer volume as broadband penetration has grown to mainstream proportions, but few can claim to have genuinely become a by-word for how an entire business sector potentially could be eradicated.

The sector in this case is the traditional recorded music business. Other businesses like TV, movies, books, cable and of course newspapers, are trying to figure out what the labels did wrong when Napster came knocking in 1999. Should they have tried to work with Napster rather than shut it down?

The music industry is now getting more flexible as we pointed out in our earlier blog today, and here’s hoping it’s not all too late. After Napster was sued out of existence, its brand was bought and relaunched by current CEO Chris Gorog (left, 2006) and his team. US electronics retailer Best Buy bought Napster last October for $54 million net of cash. Last month Napster started offering an all-you-can-stream plus five download songs for $5 a month, which Gorog really believes is as close to the original and popular Napster as he’s going to get legally.

Here’s Gorog on the Napster blog discussing those 10 years and the future of the music industry.

(Photos: Reuters)

Long time independent digital music retailer eMusic has finally got its mittens on some major label music after signing a deal with Sony Music Entertainment — and the company says it is still in talks with other majors like Universal Music, Warner Music and EMI to see if it can get more.

From the third quarter eMusic will have catalog from names like Bruce Springsteen, The Clash, Johnny Cash and Outkast. Catalog music here means songs older than two years.

eMusic, which is an independent retailer owned by JDS Capital Management, competes in a tough market led by Apple’s iTunes and Amazon.com MP3. But it has has held its own and even claimed to be the No.2 digital music retailer on some measures in the recent past.

It has managed to gain market share by being the digital retailer of choice for music on independent labels focusing on the grown-up end of the market.

Some see this deal as the latest sign that the major labels are finally getting round to the idea of becoming more flexible and prepared to work with a wider range of retailers on less onerous terms licensing terms.

eMusic, for instance, sells its service as a subscription offering the ability to download 24 tracks for prices starting at $12 a month or 50 cents a song. This compares with the 99 cents a track that iTunes typically charges customers, though it does not tie customers into a monthly commitment.

But the music labels have recently struck deals with Napster allowing fans to stream all the music they want for $5 and get 5 song downloads for free. NY Times reported last week that the labels reduced their fee demands for music social networking site Imeem, which helped it survive.

About time you say? Well, some feel it may be too late as music sales continue to tumble. The music label model will likely change significantly over the next few years so much so that how much retailers charge customers for buying downloadable songs may become completely irrelevant.

(Photo: Outkast/Reuters)

The long-expected launch of MySpace Music is happening in drips and drabs. On Sunday MySpace and major music label partners in the joint venture said MySpace Music will launch with four big name advertisers: McDonald’s, State Farm, Toyota and Sony Pictures.

But MySpace still did not confirm when it would launch — though that’s widely expected this week.

In the meantime, several blogs, led by TechCrunch, report that the partners are seeking third party funding of up to $100 million for MySpace Music, valuing the company at around $2 billion. Reuters has not been able to confirm this through our sources yet.

Also, LA Times reports that Facebook’s former chief operating officer Owen Van Natta and ex-Universal Music exec Andy Schuon are said to be in the running to be chief executive of MySpace Music, an appointment that MySpace CEO Chris DeWolfe had hoped would be confirmed by now.

 Keep an eye on:

• Best Buy agrees to buy Napster for $121 million (Reuters)
• Electronic Arts ends merger talks with Take Two (Reuters)
• AT&T will ‘temporarily reduce’ broadband speeds (Ars Technica)

(Reuters photo of Chris DeWolfe)