World Today

Music Industry Likely to Benefit from AOL-Time Warner Merger

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JIM MORET, CNN ANCHOR: Other benefits from the merger could be seen in the music industry. The winners could be the bands that get exposure, labels that promote music, and fans that are only a keyboard away from digital sounds.

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(voice-over): For the makers of music, it could be a marriage made in heaven.

GERALD LEVIN, CHAIRMAN, TIME WARNER: The music business is built on exhibition, usually in the past through radio or MTV. Now you have, through AOL and through the Internet, you have this worldwide opportunity to promote.

MORET: And promote they will. With the muscle of the world's largest Internet provider in AOL and the roster of talent in the Warner Brothers records stable, including Madonna, Cher and the Red Hot Chili Peppers, you have the potential for a musical cash cow.

ALAN LIGHT, EDITOR IN CHIEF, "SPIN": It's a new ballgame for how you take artists and albums out there to the public. And I don't think we've seen even the beginning of what that actually means yet.

MORET: High on the list of revenue sources, the digital distribution of music. MP3 audio, simple computer files featuring the music of both obscure and established talents, are already easily accessible online. Experts say revenues from the downloading of MP3 files will swell from last year's $300,000 level to nearly $150 million by 2003.

But the impact on the music industry will be even greater. A leading research provider on Internet commerce says, quote, "Downloadable musical will serve as a powerful driver of the larger market of physical and online music sales, which is expected to exceed $2.6 billion by 2003." That's 14 percent of the total U.S. retail music market.

In 1998, online sales of music accounted for just over one percent. As MTV creator and current AOL executive Robert Pittman put it...

ROBERT PITTMAN. PRES. & COO, AMERICA ONLINE: Doing for the industry in the next decade what the CD did in the 80s. MORET: It's the same kind of boom other online retailers experienced. This holiday season, each of the top-five online shopping sites sold music CDs.

While the bands play on, the merger of Time Warner and AOL could be music to their ears.

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MORET: One sign that downloading music off the Internet is becoming big business: "Rolling Stone" magazine has a charts page that lists the most popular downloads.

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