Monday was an inauspicious day for Internet-based entertainment ventures -- except for investors who heard RealNetworks (RNWK) - Get Report deliver a history lesson.

The bad news, for people who hope that the Internet will change the entertainment business, was Internet conglomerate

CMGI's

(CMGI)

announcement it will shut down its online entertainment portal

iCast

unless it can sell it, a move that will cost the company somewhere around $25 million to $30 million in the fiscal second quarter ending Jan. 31, 2001. CMGI Chairman David Wetherell insists there will be "extraordinary opportunities" for music and entertainment online. But CMGI isn't interested in exploring them, given Wetherell's expectation that profitability for iCast is "years away," and his unwillingness to fund losses until then.

Yet on the flipside of iCast's flop -- which follows the demise of entertainment sites

Pop.com

,

Digital Entertainment Network

and

Pseudo Programs

-- came Glaser's encouraging thoughts about the future of Internet-delivered music, which came during a discussion Monday at the

Next Generation Media

conference held by investment bank

Thomas Weisel Partners

in New York.

Throwback

As the major record labels litigate against the Internet file sharing service

Napster

, Glaser pointed out that the courtroom battle is awfully reminiscent of the legal fight waged by movie studios in the 1980s against VCR manufacturers like

Sony

(SNE) - Get Report

. At the time, Hollywood thought the VCR would kill the movie business, when in fact the new technology ended up quadrupling the value of the studios' movie libraries by leading to new revenue streams such as video sales and video rentals.

Though people may think that music companies, with their huge music libraries, are already "fully valued," Glaser suggested that because of the ongoing controversies over digital property rights, people aren't paying attention to the additional value that the Internet could create for the labels, which include

EMI

,

Time Warner's

(TWX)

Warner Music Group

,

Sony Music

,

Bertelsmann's

BMG

and

Seagram's

(VO) - Get Report

Universal Music Group

.

Glaser's analysis struck a chord with at least one investor attending the two-day conference, which opened Monday with presentations from companies such as

OpenTV

(OPTV)

,

Liberate Technologies

(LBRT) - Get Report

,

WebTV

owner

Microsoft

(MSFT) - Get Report

and

Akamai Technologies

(AKAM) - Get Report

. Tying together all these companies is the belief that there are fortunes to be made as more music and movies become available in digitized form, and as this entertainment becomes available over interactive networks, perhaps in the form of advanced cable systems.

Getting the Worm

"They're all atttacking a space that's huge and real," said the buy-sider, who asked not to be identified.

The problem is, as conference attendees acknowledged, it's a little early to tell who the winners in the interactive media market will be. And though shares in so many interactive media companies have plummeted far from their 52-week highs, it's still hard to figure out if they're inexpensive yet, the investor says. "I'm struggling with the valuations of some of these companies," the investor says. "Business models are so immature. ... I don't know how this plays out."

Glaser, by the way, told his audience at the Next Generation Media conference that Internet-only entertainment companies would go down in history as a "dopey idea." Just as it doesn't make sense to build telephones just to be used in condominiums, it doesn't make sense to build content for only one medium, he said.

Too bad for Wetherell he didn't hear advice like that before Monday.