Upstart Streamwaves.com Inc. of Dallas has won a groundbreaking license to do what many Internet music firms are itching to do: let consumers play unlimited songs from an online jukebox for a single monthly fee.
The main hurdle to such a high-powered jukebox service isn't developing the technology, it's getting permission to offer the music. The record labels have said they like the idea--in fact, Universal Music Group is trying out its own version--but they are slow to open their song catalogs to other companies for fear of reducing CD sales.
Today, however, Streamwaves is expected to announce a licensing deal with EMI Group, one of the five largest record labels, to use much of that company's music in its new service. EMI appears to be the first major label to let another company give consumers on-demand access to virtually any song in its catalog.
The EMI deal isn't enough by itself to let Streamwaves launch a viable service; it still needs licenses from the music publishers and other labels. But the agreement, like Bertelsmann's joint effort with Napster Inc., suggests that the record labels are warming to the upstarts' proposals to distribute their music online.
"If it's true, it's great news," Jonathan Potter of the Digital Media Assn., a trade group for online audio-video companies, said of the licensing deal. "It shows that people are doing interesting, exciting things, and let's see if it works in the marketplace."
So far, the only online licenses granted by major record labels have been for "music lockers" that let users store and play copies of the CDs they already own. The Streamwaves deal, on the other hand, will give consumers access to music they haven't yet bought.
Unlike Napster, Streamwaves' service won't let users make permanent copies of songs. Instead, it will simply let them listen to a wide variety of songs on demand, playing them through a computer connected to the Internet.
The main question for companies such as Streamwaves is whether consumers will accept a music service that doesn't let them keep the songs they're paying to hear in their own home. Because of Napster and MP3.com, among other popular music sites, there are many other sources of free music for home PCs.
Privately held Streamwaves, which has been operating since February, has only seven full-time employees. But it has the support of a 50-person development team at Austin, Texas-based FG Squared, an interactive design team that co-founded the company and is a main source of funds.
