WARNER MUSIC LOOSENS GRIP ON MUSIC VIDEOS

By Cecily Barnes

AOL Time Warner subsidiary Warner Music Group said Tuesdaythat it will license its music video catalog to online entertainmentprovider Intertainer.

The move marks Warner Music's first content licensing agreement sinceAmerica Online and Time Warner completed their merger in January.

Video licensing deals by the major record labels are relatively common andlack the controversy that surrounds music licensing. This is largely because music videos do not generate revenue, but rather function topromote CD sales and artists.

"There's not really an over-the-counter video market that stands to getcannibalized by redistributing videos on the Web the way that CDs arefeared to be impacted," Jupiter analyst Aram Sinnreich said.

Just recently, EMI Recorded Music unveiled a similar video licensingagreement with Intertainer. Sony Music Group licenses some of its videocontent to the company as well.

In contrast, none of the major labels, which also include BMG Entertainmentand Universal Music Group, have broadly licensed their audio content forfear of hampering CD sales. The pressure is on to do so as more music fansseek their favorite songs in digital format, often through controversialsites such as file-swapping service Napster.

Tuesday's announcement caught the attention of analysts and industryexperts, who are watching to see how AOL Time Warner will handle thelicensing of its proprietary music content.

Thus far, the newly merged company has expressed no interest in partneringwith Bertelsmann, parent of BMG and Napster, in its planned subscriptionmusic service. Instead, it is commonly thought that AOL Time Warner will create an in-house musicsubscription service using Warner Music's content.

The Intertainer agreement doesn't suggest any different, analysts say.

"Audio content is a horse of another color; they're much more protective ofit," said Sinnreich. "I think today's announcement betokens very littleabout (Warner Music's) pure recorded music strategy. I would hesitate to read too much into this deal.

"I think it's much more likely that they'll license their content to companies like Loudeye and MP3.com before they do to rival media companiessuch as Bertelsmann (or) Vivendi Universal."