By Reshma Kapadia
NEW YORK, June 11 (Reuters) - Spanish Internet media companyTerra Lycos on Tuesday launched an onlineradio-style music subscription service that will offer music fromfour major record labels.
Terra Lycos said it partnered with Listen.com to create thenew Web service, Lycos Rhapsody, which will offer access to morethan 10,000 albums. The service does not let users download themusic or record it on CDs, but plans to offer that capabilitylater.
"This is another step in the evolution of the digital musicmarket," said Gartner2Media Research Director P.J. McNealy.
Online music efforts by record companies have not resonatedstrongly with Web surfers. After being spoiled by the range ofartists and possibilities that online-music swapping serviceNapster offered for free, many Web surfers have been turned off bythe price and limits of the services backed by record labels.
Listen.com has struck deals with Bertelsmann AG's BMG, Sony Corp.'s <6758.T> Sony Music Entertainment, EMI GroupPlc's EMI Recorded Music and AOL Time Warner Inc.'s Warner Music Group, as well as many independent labels.
Listen.com Chief Executive Scott Ryan said the company wasalso in talks with Vivendi Universal's Universal Musicunit.
Like many Internet media companies, Terra Lycos is feeling thesting from the sharp downturn in advertising spending. LycosRhapsody is the company's latest effort to shift away from adrevenues toward paid services.
Internet media companies "are looking for any add-on servicethat means more revenues, and every single (Internet media)company is trying to transform their business into anentertainment source, not a data source. Music is the first step,"said McNealy.
Listen.com's Ryan said the company would introduce CD-burningcapability later this year.
"We are working with Lycos on that," Ryan said. "For rightnow, there are a substantial amount of people who listen online,and we have to address them."
When the service does offer CD-burning capability, Listen.comwill have to renegotiate the licenses with the record labels. Ryansaid he was already engaged in such talks.
Terra Lycos will give Web surfers free access to the serviceuntil June 30. After that, users will be able to choose one ofthree tiers of service. The free tier will offer 20 differentradio stations with FM-quality sound.
The second tier, which company executives likened to "basic"cable, will let users access more than 50 commercial-free radiostations with CD-quality sound and the ability to skip tracks, ata cost of $5 a month.
The last tier will cost about $10 a month and allow forunlimited music via more than 50 commercial-free radio stationswith CD-quality sound and the ability to skip tracks and save themto a library.
"It's building on the base of music services we've offered inthe past," said David Pritchard, senior director of music, TV andfilm for Terra Lycos. "Obviously, we have to keep running and sowe want to stay on the leading edge of music services that arebeing offered online.