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Companies to Sell Songs on File-Share Service

November 25, 2004

LOS ANGELES — Three major recording companies have agreed to make their music available to be shared and sold over a new online file-swapping service that aims to lure music fans away from rival services where trading of music and movies remains unfettered.

Universal Music Group, Sony BMG Music Entertainment and Warner Music Group – three of the four major recording companies – have licensed their catalog of music to Saratoga Springs, N.Y.-based Wurld Media, the firm said Wednesday.

Wurld Media plans to launch its file-sharing software, dubbed Peer Impact, early next year.

Details of the software and price model were not released, but the company said it would allow consumers to buy and share music, video and other content, while ensuring “that artists and rights holders receive their due compensation for each file shared on the network.”

The company added that the service would only distribute media that is licensed or in the public domain.

“The online media market is presently split between authorized legal paid-download services and unauthorized free services,” Greg Kerber, Wurld Media’s chairman and chief executive, said in a statement. “The consumer is stuck somewhere in the middle, and that’s where Peer Impact comes in.”

Representatives of Universal and Sony BMG declined to comment. Calls to Warner were not immediately returned Wednesday.

The Wurld Media announcement follows recent reports that Universal and Sony BMG were making overtures toward making their music available for distribution on file-sharing networks.

Universal has licensed its music to a company founded by Shawn Fanning, creator of the original Napster song-swapping program, that has reportedly been working on technology to filter or block unauthorized song files from being traded over peer-to-peer networks.

Sony BMG has reportedly been in talks to sell its music on a new file-sharing service called “Mashboxxx,” which is due to launch in January and also expected to incorporate technology to block computer users from trading songs without permission.

Still, doubts linger over whether the recording industry will be able to turn millions of computer users – now swapping billions of files online with programs such as Grokster, Kazaa and eDonkey – into paying consumers with licensed versions of file-sharing services.

“People who want to buy music have any number of legal alternatives now that work out extremely well, and people who want to share music can get it for free,” said Josh Bernoff, an analyst with Forrester Research Inc. “This idea of monetizing P2P, it does save on bandwidth costs, but in the end, it’s not likely to catch on.”

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