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Universal Music-Diva DealSpurs Talks with Operators

Universal Music Group is looking to test three different subscription models as it works with Diva Systems Corp. to port its broadband music-video service to various interactive-television platforms.

The record label is talking with six MSOs about affiliation agreements, including such Diva partners as AT&T Broadband, said Lisa Farris, senior vice president of market development at UMG's eLabs.

UMG's The Viewing Lounge includes 500 music videos and other encoded content from the label's library.

Excite@Home Corp., RoadRunner, SBC Communications Inc. and Sprint Corp. carry TVL as part of their cable-modem or digital-subscriber-line services.

In June, UMG broke into the ITV realm by signing a deal with Diva.

The ITV/VOD platform would offer the same music content that's available via the high-speed data service, as well as electronic-commerce and pay-per-view concert applications, Farris said.

The baseline service — which allows subscribers to request songs from a playlist — would remain free. Access to on-demand videos would carry a fee.

UMG is looking to charge subscribers for usage over a 24-hour period, or to set fees for a specific amount of content, say 20 or 30 hours worth, accessed over a month's time.

Farris hopes to launch pilot tests in the first or second quarter of 2002. Diva supplies AT&T, Charter Communications Inc. and Insight Communications Co. with VOD content.

Diva is working to port the UMG content to Motorola's 2000-series boxes, as well as Philips Consumer Electronics boxes that use middleware from UMG's sister company, Canal Plus U.S Technologies.

The ITV service would have strong e-commerce capabilities that could accommodate the sale of CDs, concert tickets, merchandise and perhaps even audio services, said Farris. Universal is developing a subscription Internet-audio service, PressPlay, in conjunction with Sony Corp.

Of all the record labels, UMG is furthest in front in terms of making music videos available as broadband content. The support comes from the top, according to Farris , starting with Vivendi Universal chairman and CEO Jean-Marie Messier.

Farris believes UMG can help cable operators pay for advanced equipment, including digital set-tops, servers and cable modems.

"We have a bulletproof revenue model and consumers have told us they want this," he said. "TVL is the next generation of programming."

Ultimately, UMG envisions a day in which PPV concerts would be available through TVL at a far cheaper price than traditional PPV concerts.

At the Cable & Telecommunications Association for Marketing Summit in San Francisco, UMG demonstrated an application through which consumers could order a Sting concert for $3.99.

A show on Sting's current tour would be filmed, encoded, then placed on a VOD server at a price far below the $9.95 or $19.95 of typical PPV concerts.