Few friends
The next couple of years found him in constant struggle against an industry that associated MP3-formatted music with online piracy. Robertson did his best to stay on the right side of the debate, offering a place for independent and unsigned musicians to post their songs online, but his constant broadsides against the industry and projects such as the Secure Digital Music Initiative (SDMI) won him few friends among music industry executives."What the music industry really needs is an Internet enema," Robertson wrote in one of his periodic "Michael's Minutes" messages to the MP3 community in late 1998. "It needs to start over. This is the promise of music in the digital age."
Robertson's vision of the Internet allowing artists to sell directly to listeners was soon eclipsed by Napster, however. Instead of turning to MP3.com's massive databases of unsigned musicians, consumers took up the file-swapping habit, using Napster to trade major-label music, work by independent musicians, bootlegs, and any other songs or sound clips they wanted.
MP3.com continued trying new tacks, however - and it was one of these, the online music-storage system inside the My.MP3.com service, that finally gave the big record labels a legal weapon against Robertson. They sued his company in early 2000 in a case that has already cost MP3.com more than US$150 million in damages and that continues to spawn copycat lawsuits.
But even under the threat of the lawsuit, Robertson managed to establish MP3.com's infrastructure as one of the strongest music-delivery systems online. Vivendi noted as much in its public statements about the acquisition, saying it would use its former enemy's technology as part of the backbone for its planned Duet music-subscription service.
Robertson himself is moving into a new role as special adviser to Vivendi Universal Chief Executive Jean-Marie Messier. Financially, he's also making out handsomely from the deal. According to recent regulatory filings, he owns more than a third of MP3.com, which would make his take from the US$5 per-share sale more than US$115 million.
On the other hand, Robertson's stake has shriveled from more than US$1 billion in the past 18 months as MP3.com's shares have plunged by about 92 percent.
The suits jumped over the label
The acquisition highlights a question that has haunted the big record labels' recent warming to online distribution: Who is now in control of the online music strategy?
After years of opposing start-ups and wide online distribution, the major labels are moving more quickly than ever. But in many of the biggest announcements, it is the corporate conglomerates that are taking a lead rather than the labels themselves.
"Top-level corporate bosses of these consolidated media companies are recognising that their record subsidiaries are not moving quickly enough," Forrester's Sheirer said.
The first visible sign of this came in October last year, when media giant Bertelsmann shocked the industry by announcing its e-commerce division would team with Napster to create a legal subscription service. At the time, Bertelsmann record label BMG Entertainment was in the middle of suing the file-swapping service for copyright infringement.
Many of the music label's top executives objected to their corporate parent's decision to pin its future on Napster. Executives including BMG CEO Strauss Zelnick and marketing head Kevin Conroy resigned from the company soon after the decision was announced.
In the case of MP3.com, Robertson will report directly to Vivendi Universal's Messier as a strategic adviser, rather than to an executive from Universal Music Group.
The online music-distribution arms appear in these cases to be falling into a larger frame of Internet commerce, rather than becoming solely an offshoot of the music business.
That may leave little room for smaller companies to create thriving services unless they, too, can strike deals with the major labels. But the subscription services will have to prove they can satisfy consumer demand, a task the majors have so far been unable to accomplish. If they fall down in this task, new generations of music companies will spring up to close the gap, insiders say.
"There will always be room for continued innovation," said Bob Kohn, chairman of EMusic, which was also recently purchased by Vivendi Universal. "Those innovative efforts tend to come out of entrepreneurial efforts. There will be new start-ups with new ideas."
