For Net music, exclusives are king

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afterward for years, ultimately leading to an investigation by the New York attorney general this year. Similarly, in the case of big retail record stores, labels have long provided "promotional allowances" for big releases, essentially buying prominent placement for wall posters and prime shelf space.

By contrast, a barter system underlies today's online world.

Online music executives seeking exclusives from artists or labels say they'll often put together a proposal promising them top visibility--front-page exposure, a themed playlist, artist of the week status, or sometimes even a whole section dedicated to them--in return for access to new songs or videos.

In some cases, marquee artists have asked for money or sales guarantees, but this is rare. Industry sources have said that The Beatles have sought millions of dollars for the exclusive rights to sell their music online, for example.

"Money isn't really on the table. It's more of a programming opportunity."

--John Jones, vice president, MusicNet

"I think for the most part it is a bit of a landgrab just to get some point of differentiation," said John Jones, MusicNet's vice president of programming and label relations. "Money isn't really on the table. It's more of a programming opportunity."

This sometimes results in albums or singles being released solely on one service for a short period of time. But some labels work with several at once, having artists record live tracks unique to each service, distributing the exclusives around.

Joss Stone, a young British soul singer that EMI has put substantial resources behind for the last year, created exclusive live tracks for several different services this way.

The arrangement can work less competitively in the case of back catalog or out-of-print material. The music services are often run by music aficionados who consult their own record collections and then tell labels what's missing from the online catalogs.

"A lot of times the labels don't know what they have," said Tim Quirk, executive editor for RealNetworks' Rhapsody editorial team. "They've been amassing recordings for so many years, but records go out of print, and regimes change. Buildings occupy the same space, but the people aren't the same, and there's no institutional memory. They need music geeks like us to go, 'Why isn't this available?'"

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