Skip to main content
ad info technology > computing
  Editions | myCNN | Video | Audio | Headline News Brief | Feedback  




Consumer group: Online privacy protections fall short

Guide to a wired Super Bowl

Debate opens on making e-commerce law consistent



More than 11,000 killed in India quake

Mideast negotiators want to continue talks after Israeli elections


4:30pm ET, 4/16










CNN Websites
Networks image

Major labels pick up the beat of online music

band playing on stage uses its weekly TV show to help expose new bands to the public  

(CNN) -- As founder of the seminal rap group Public Enemy, Chuck D has never shied away from confrontation. So, in May of 1999, he fired one of the loudest shots in the online music revolution:

"I'm looking to be public enemy number one and a force to be reckoned with this new technology."

Public Enemy became the first well-known group to release a full-length album as a digital download. And the group did it at, an independent music Web site run by former record company chief Al Teller.

"It was very exciting to see people from all over the world go online to download these bytes on their computers," Teller said. "We sold well over 1,000 electric downloads of this album."

What do you think of musicians who give away their music for free on the Web? What does the future hold for Napster and similar sites? Are they violating copyright law or providing a legitimate service?
Join the discussion
GRAPHIC Copyright in the digital age

It was far from the 500,000 required for a gold record. But it was important just the same.

The consensus in the online world was that the genie was out of the bottle and that digital music distribution was a giant threat to the big five record labels.

"This is revolution, not an evolution," Teller said. "The Internet has completely changed the rules of the game."

When Teller made that statement last March, it seemed that Atomic Pop was well-positioned to take advantage of the record industry's slow response to the Internet explosion.

"When a new artist breaks through in a very massive way, and everyone can say, without any hesitation, they broke online, the dam will have burst," Teller said.

But things didn't work out for Atomic Pop quite the way Teller had planned. In mid-September, the company quietly closed its doors, citing current market conditions, for what it called a major restructuring.

"It's really a tough time to be in online music right now," said Hane Lee, a staff writer for The Industry Standard magazine. "Obviously, there are these high-profile lawsuits against companies like Napster and MP3-dot-com."

And while Atomic Pop was trying to do it in a way that was legal and not as threatening to the way things are done, the Internet still represents a threat to the traditional music business, Lee said. "And investors, frankly, are sort of wary of that right now."

One of the changes Teller was trying to make was to the financial rules of the music game. While major label artists get about a 10 percent cut of each CD sold, Atomic Pop was entering into 50-50 partnerships with its artists.

Al Teller
Al Teller, president of Atomic Pop, said their goal was to put control of the record label process into the musicians' and consumers' hands  

"Their philosophy was that we're not going to spend much on marketing and traditional kinds of promotion," Lee said. "We're going to take advantage of the Internet, which lowers all those costs, so we'll be able to pay our artists more."

It was a good idea in theory, but it fell short. It may take major music muscle to get an artist's work noticed on the Web.

"What labels are very good at doing is building up an artist's brand through their tremendous marketing network," said Aram Sinnreich, an online entertainment analyst at Jupiter Communications.

"No question, we will see bands broken on the Internet," Sinnreich said. "The Internet provides amazing one-to-one marketing possibilities. But eventually, they're going to have to migrate over to the traditional labels if they want to grow into platinum and gold sellers, because nobody else has the kind of support that labels can provide at this point."

One online record label has found a way to have its cake and eat it, too. is similar to, but with one big difference: It was started by the powers-that-be at Universal Music Group, and there's no doubt that major label backing has helped fuel its success.

Farmclub President Andy Schuon says the original idea was to allow artists anywhere in the world to upload their music to the site, where it can be heard by the company's talent scouts.

"It's kind of using technology to provide a more efficient way to find the next big artist for our record company," Schuon said.

And a lucky few do win the music business equivalent of the lottery: a chance to appear on Farmclub's weekly television show.

The show is essentially an infommercial, purchased by Universal on the U.S.A. Network, but it has become an important stop for established acts as well as newcomers. With more than a million viewers every Monday night, it has proven to be Farmclub's best promotional tool.

Though the major labels have been slow to react, is an indication that their starting to catch on to this whole online music thing.

Still, as technology advances, Chuck D for one refuses to give up hope for a do-it-yourself alternative. And he continues to run his critically lauded hip hop music destination,

"Two years from now, we could see a million artists and a million labels all operating on the Internet," Chuck D said.

But for Teller, it may have just been that the timing was off.

"Atomic Pop was a great idea from the start," Lee said. "It was trying to put control into artists' hands and back into consumers' hands and ... to give people more options than just going through the major labels

"I think it was a great idea and it's too bad that it didn't work out."

U.S. lawmaker wants to legalize MP3
September 29, 2000
Music copyright groups permit global Internet licenses
September 29, 2000
Digital music security initiative nearly ready
September 22, 2000
Music, book industries to lose billions
September 21, 2000

Atomic Pop
Jupiter Communications
Universal Music Group
USA Network

Note: Pages will open in a new browser window
External sites are not endorsed by CNN Interactive.

Back to the top  © 2001 Cable News Network. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines.