August 1, 2005

Universities enroll in music services

By Antony Bruno

SAN FRANCISCO (Billboard) - Get 'em while they're young.

That appears to be the philosophy behind the recent effort
to install digital music services at college campuses

Fewer than 100 of the nation's 3,300 colleges and
universities offer their students discounted access to
authorized digital music services. But that figure is expected
to increase in the next six months.

On July 18, the University of California and California
State University systems selected four companies to provide
digital music services to their combined 33 campuses. Cdigix
and Mindawn have signed contracts, while Napster and Sony
Connect are working out the final details of their agreements.
This is the largest systemwide deal to date, covering a total
of 600,000 students.

Earlier in the month, Napster formed a partnership with
Dell, and it continues to negotiate with other tech companies
to bundle its services to schools.

Until recently, universities and digital service providers
signed deals on a campus-by-campus basis. The systemwide deal
by the California schools is seen as a catalyst for the rapidly
developing market.

"This sets a trend that other systems will look at
closely," Cdigix president Brett Goldberg says. "Now we will
really start to see the schools who've been waiting to see if
this is just a trend say it's a viable thing."


Cdigix, Napster, Rhapsody, Rukus Networks and other service
providers targeting the university market have reported a sharp
increase in requests for information and expect the number of
deals to double by early next year.

"There are a number of statewide systems that are
requesting proposals or have otherwise expressed a lot of
interest," says Avery Kotler, senior director of business and
legal affairs at Napster, which has deals with Cornell
University, the University of Miami and the Pennsylvania State
University system. "They're geared at signing up a lot of
schools at once."

This comes as good news to the music industry, which has
long viewed the internal, high-speed local area networks
available at most colleges and universities as a hotbed of

In April, the problem led the Recording Industry Assn. of
America to target more than 400 college students at 18
universities with file-trading lawsuits and issue notices of
copyright infringement to 140 college administrators, alerting
them to the file-trading activity on their networks.

"We are concerned, and we want to orient people toward
legal alternatives," says David Walker, director of advanced
technology for the University of California, which received
such notices. "We're intellectual-property owners ourselves,
and we see a role in helping foster the creation of the


The way music services are offered affects whether students
actually use them. When students are asked to pay the cost
themselves, usage is low, according to several service
providers; when the cost is built into existing student fees,
usage is much higher.

At Cornell this year, more than 10 million songs were
accessed via Napster on a campus with only about 13,000

"You're running into a services-versus-beer issue," a
Rhapsody representative says. "We try to work with universities
to offer them the opportunity to make a good choice at a rate
that's competitive with beer."

Yet the big question is whether the availability of these
legal alternatives will stem the traffic on illegal
peer-to-peer services.

"If you're looking at this in the macro picture, there are
two points to be addressed," Cdigix's Goldberg says. "Is this
reducing the amount of P2P illegal traffic on campus, and are
the students that are leaving campus becoming users of the
paid-for services once they've graduated?"

University officials and label executives say it is too
early to get accurate data on either point, but these are
questions the industry wants to answer, and soon.