German media group Bertelsmann AG has announced plans to group its online music activities in a new unit called BeMusic. The unit will combine online music retailer CDNow, which Bertelsmann acquired last year, with its BMG Music Service music club to create a division with about $1 billion in revenues and more than 15 million customers.
News of Bertelsmann’s online plans closely follow moves last week made by Bertelsmann, AOL Time Warner, and EMI Group to partner with RealNetworks to create MusicNet, a venture designed to license music and subscription technology to other online music services.
The five major record labels are scrambling to increase sales of music over the Internet to exploit the potentially huge market revealed by peer-to-peer file exchanges like Napster. BeMusic is expected to launch later this year, providing online listeners with both downloadable and streaming music from Bertelsmann’s vast catalog of titles. Similar initiatives from the other four music titans are sure to follow as the year passes. In a flurry of digital activity, all of the major record labels last week announced plans to create digital music distribution networks.