Changing the Tune - Company Operations

Universal's Larry Kenswil-is-leading the-digital music band.

For the last year, the Big Five music labels have been getting ready to battle each other on the Web. But none has opened as many digital fronts as Universal Music Group, which is building the first fully online music company. From discovering artists to marketing the label to selling albums, Universal believes that the biggest gun in its arsenal is a sophisticated Web strategy.

Behind this reinvention is Larry Kenswil, head of Universal's new media incubator, eLabs. Kenswil, who stepped down as chief of the company's legal department a year ago, is just as comfortable discussing the intricacies of bandwidth as he is parsing an artist's contract. That know-how has helped the 49-year-old Boston native shepherd Universal's growing flock of Internet initiatives.

Kenswil developed his interest in digital music while he was still in his counsel post. With the $40 billion music industry playing legal smack-down with online upstarts, Kenswil began looking for ways to use the Net to take advantage of the music world's core asset -- copyrighted material. Universal has licensed its music to online storage "lockers," such as San Francisco's Musicbank, which let consumers stream copies of CDs they already own. The company's $30 billion merger with French media giant Vivendi will open a digital music pipeline to 80 million cable TV and cell phone customers. And it has been mending fences with online music pioneer MP3.com.

But for Kenswil and his team, repackaging existing material isn't enough. They're pouring their energy into dreaming up new products. "To enhance the experience, you want to sell more than just the music," Kenswil says.

Broadband will be the key to providing that enhanced experience. In anticipation of the moment when it finally reaches critical mass, Kenswil and company have already assembled a slate of broadband-friendly programming, including videos, artist profiles and a music-trivia game show.

For those who don't want to wait for broadband, there's Farmclub, a digital carnival of music and video launched early last year. The Web site serves as Universal's online talent scout, inviting unsigned bands to upload their music, which mingles on the site with established hits. Two acts, Sonique and Fisher, have drawn a national following since appearing on the site.

Farmclub is also host to Universal's fledgling subscription service, which Kenswil says will eventually offer basic and premium packages like cable TV. That means more listeners for more music, which is just what he wants. "The overarching goal," he says, "is to expand the music business." And to win the online music war.

COPYRIGHT 2001 Standard Media International
COPYRIGHT 2001 Gale Group