Warner Music, Echo ink deal

November 5, 2001 Posted: 2003 GMT

LOS ANGELES (Reuters) -- Warner Music Group, home to such stars as Staind and Madonna, on Monday announced a licensing deal with online music provider Echo Networks, marking the recording giant's first deal with a Web subscription service beside MusicNet, which it partly owns.

Privately held Echo now plans to offer streams and downloads of Warner Music recordings through a subscription service in the first quarter of 2001. It will also offer the music through services it develops for third parties.

Echo, one of a few remaining stand-alone online music providers, said it is close to deals with other major labels, which face pressure to license their music to independent operators even as they launch their own online music services to tap a market that had been dominated by the free song-swap service Napster.

Since Napster was idled by a copyright infringement suit by the music firms, services such as MusicNet and PressPlay have been put together by major labels such as AOL Time Warner Inc.'s Warner Music, EMI Group PLC, Bertelsmann AG's BMG, Vivendi Universal's Universal Music, and Sony Music.

CNNfn and CNNmoney.com are also subsidiaries of AOL Time Warner (AOL: Research, Estimates).

Echo, based in San Francisco, said it was one of several smaller online companies to receive a civil investigative demand (CID) from the Justice Department involving a probe into MusicNet and Pressplay. Several online executives said recently their talks with the major labels appeared to have gotten a boost after the Justice Department revealed last month it expanded the probe.

Echo said the deal announced Monday built on a November 2000 deal with Warner under which the label licensed music to Echo's Web radio service that offers streamed music.

"We'd been discussing this deal with Warner since well before the Justice Department probe, but having said that, I think there is increased pressure for content owners to license music," said Tuhin Roy, executive vice president of strategic development for Echo.

"We're close to closing similar deals with other major music groups," he added.

Another upstart FullAudio Corp. has reached various licensing deals with music publishing firms as well a deal for the recorded music of music giant EMI.