Wippit finally seals first major

The record company will provide Wippit users with full access to its audio inventory, which contains artists such as the Rolling Stones and the Beach Boys, for a flat monthly fee.

Wippit has 165,000 users, though so far only 5,000 of them have chosen to subscribe to its paid-for service, which is charged at £4 per month or £30 per year. Wippit founder and CEO Paul Myers aims to review the company's pricing model once two or three majors have signed up.

EMI will distribute tracks across the P2P network from its central server farm to help it keep tabs on downloads and manage rights. Users will be able to play songs as long as they keep subscribing, but once they stop paying fees, EMI will prevent them from accessing its back catalogue.

The agreement represents a huge coup for Wippit, which has persevered with negotiations with all the major record labels since 2000, despite their reluctance to work with file-sharing networks.

Myers said: "This could be the beginning of a beautiful relationship. It takes two

to tango though and we've certainly been doing our part to make things happen."

He said agreements are now in place with two other record labels and the company continues to talk with a third, which leaves one unnamed major label out in the cold.

The majors have complained bitterly that P2P networks such as Kazaa have contributed significantly to declining CD sales, but are now starting to embrace the web as a distribution platform.

Jupiter Research senior analyst Mark Mulligan described EMI's decision to make most of its catalogue available online as "an eye opener".

Mulligan added: "While consumer demand remains low and file sharing rampant, the foundation is now falling into place for Europe's legitimate online music market."

The research group expects online music industry revenues to quadruple over the next five years, to be worth $3.3bn by 2008, when web sales will account for one in four record purchases.

Jupiter does not expect digital sales to surpass $80m this year, yet iTunes alone reaped $1m in revenues within a week of launching its Mac-based service in April and has now sold $14m worth of music. It launched a Windows version two weeks ago and generated $1m in three days.

18 September 2003:

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