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For much of the internet’s life, record companies have responded to

it in a way you would expect a country music fan to react some

pumping-hard house or hip-hop.

They’ve buried their heads in their hands wishing it would go away.

Meanwhile, numerous start-up companies have been sprouting sites offering

cheap digital downloads of music tracks - mainly in MP3 format - and

stealing their business.

But lately record labels have shown signs of waking up to the fact that

it’s here to stay - the net, that is -and are finally embracing new

technology rather than ignoring it.

One of the latest major-label dinosaurs to wake up has been BMG

Entertainment (BMG), which owns around 200 record labels including Arista,

RCA and Ariola.

Earlier this month, it announced a string of strategic partnerships that

will see it make digital downloads of its artists’ music commercially

available this summer.

It has struck deals to give it the software, digital rights, services and

clearing house facilities to deliver this.

”All record companies wish they’d responded to the net and developed a

strategy earlier but they’ve come a long way in the last year,” says Dave

Phillips, chief executive at digital download site iCrunch.

”Before then record companies were openly hostile to digital

downloading.

MP3 was the devil’s second coming. Now they’re beginning to pursue more

proactive and sensible strategies.”

Adrian Strain, director of communications at the International Federation

of Phonographic Industries (IFPI), says: ”BMG’s announcement is the latest

in a series of moves to promote the record industry in the electronic

marketplace.”

The IFPI provides a framework for the market, overseeing the British

Phonographic Industry (BPI) and equivalent bodies around the world.

Its concerns are legislative, political and technological. ”The net has

got to be portrayed as a great opportunity, with copyright protection

built into the process.

”There’s a whole generation growing up thinking its okay just to download

music for free. We take very seriously the threat posed by net piracy,”

says Strain.

The major companies last year put aside their entrenched rivalries to

spearhead their own download technology.

Dubbed SDMI (Secure Digital Music Initiative), it aims to create the

conditions for an open download technology standard, bringing together

record labels and software companies. And making the process secure.

But iCrunch’s Dave Phillips is sceptical. ”They haven’t yet produced a

standard consumers can use.

”Meanwhile, millions of MP3s are being downloaded every day. Sixty to 70

per cent of 12 to 24-year-olds are regularly downloading music in the

US.”

He says the SDMI’s steering committee has concentrated heavily on security

at the expense of making the technology accessible.

”Any security standard carries a degree of compromise in its

usability.

They haven’t begun to address that balance,” he says.

Aram Sinnreich, analyst at research company Jupiter Communications is

equally sceptical: ”It is becoming less and less relevant whether SDMI

arrives at its own conclusion because consumer electronics and record

companies are already all making their own deals,” he says.

Not only this, but BMG and Universal Music have gone a step further by

linking up to create getmusic.com, a site that promotes its artists with

in-depth content, CDs for sale and some free downloads.

Following their recent merger, and with their leading 30 to 40 per cent

worldwide market share, Warner Brothers and EMI look best placed to

exploit the potential of the net.

All the more so, since they have the support of AOL thanks to January’s

AOL/Time Warner mega-merger.

But iCrunch’s Phillips warns: ”If they appear to plug their own artists

too much at the expense of others’, they’ll alienate other content

providers.

They have to be careful not to lose their credibility with consumers.”

This means creating a music marketplace that includes the artists of rival

labels. After all, consumers aren’t used to record stores offering the

acts of just one company.

”Record companies in general aren’t consumer-centric. They don’t have the

tradition, culture or expertise of developing and nurturing consumer

relationships, only of signing and promoting artists,” Phillips adds.

The IFPI’s Strain is more sympathetic to the record companies’ plight and

their initial reluctance to embrace digital downloading. ”You’d expect

companies with the expertise to be first. Record companies are coming into

it now at the right time,” he says.

So at last the dinosaurs are waking up. But with many sites offering MP3s

from 33p per download in the UK, it looks like they will soon be forced

down to the start-ups’ prices if they don’t acquire them first.