Report: RealNetworks in Talks for Subscription Service

Seattle-based RealNetworks, Inc. is said to be negotiating with three major record labels about a planned online music subscription service, according to The Wall Street Journal online.

Quoting people familiar with the talks, the report said AOL Time Warner Inc.’s Warner Music Group, Bertelsmann AG’s BMG Entertainment and EMI Group PLC were discussing the possibility of a subscription service dubbed MusicNet.

RealNetworks, which has the rights to the MusicNet.com name, is expected to offer the record companies an ownership interest in the service. Industry executives were said to be still working out the details, although one estimated fee for the service was pegged at around $10-$15 a month.

The report also said the companies were discussing the possibility of giving file-swapping service Napster a seat at the table by letting it license the service under terms and conditions. The controversial file-sharing service is currently under court order to not allow access to music files that have been copied illegally.

The report is one more installment in an ongoing movement to introduce subscription or paid content on the Web, and a major development in the music industry, as labels music wrestle with how to approach the Internet as a distribution arm for music. Online music subscription services are on the drawing boards of major labels such as Vivendi Universal’s music division as well as AOL.

The Journal report said the deal could be done by next week, although there are no guarantees. If it does come to pass, the alliance with three major record labels, and the amount of music available through the service, would rival a joint-subscription service that Vivendi Universal and SonyCorp. are planning.