Unlike many internet newcomers, Online Classics has failed to ignite. True, there was a 100 per cent-plus premium on the first day's dealings in December, but, since then, the shares have 'only' risen from 133p to 182p.One reason for this apparent underperformance is criticism from internet investment gurus who said Online Classics' plans for broadcasting live musical, opera and classical performances over the internet would hit opposition from record companies, agents, promoters and concert hall managements: they simply would not wear it.

Admittedly, the company came to market with only a few months' track record. But it needed money and corporate credibility to strike the deals. A number have been completed - with more to come over the next few months.

Founder Chris Hunt is an experienced record company executive. He has a 30.5 per cent stake. Fellow director and co-founder Andy Sievewright owns 20 per cent.

They insist they have the best 'brand grip' on the sector, with hardly any competition. They have successfully snapped up broadcast rights to tens of thousands of recordings held by RM, which has almost half the world market.

Negotiations are underway with other large back-catalogue companies which should culminate in an announcement shortly that Online has control of around 90 per cent of the world's existing classical recordings.

'We are also signing up lots of artists like Jessye Norman and have done deals with opera halls and theatres such as the National Theatre. We aim to corner the market for anything in the performing arts', says Hunt.

Transmitting live music and pictures over the internet is relatively new technology but Hunt is confident his newly appointed technical director will come up with the answers.

He will have to. The first live net broadcast will have taken place by the time this issue of GCI appears. Some 15 live concerts will be broadcast every year with viewers paying around £2-3 per performance.

Company brokers Hoodless Brennan say: 'Sound and picture quality of streamed audio and video material will continue to improve and take up to two years to achieve a similar level with that currently enjoyed by TV viewers'.

At this stage, net TV will be almost indistinguishable from terrestrial or satellite broadcasting by early next year. In many cases, it will be watched on the same TV set.

Crucially, the Online business model does not conflict with record companies' objectives - as they want extra publicity and compact disc sales for their artists. Setting up their own websites would not be worthwhile as the traffic would be too small. In any case, they will receive performance fees from Online.

Online has four different ways to make money: by advertising and sponsorship, by pay per view for each concert or musical (either live or from the catalogue), by annual subscription for a whole year of events, and by selling CDs and DVDs from an on-line shopping site.

The company is expected to lose money this year and next, but to break even in 2001-2. The following year it could make £40 million plus.

'We have got content, a clear market niche and a high quality service. We are building a big catalogue with the very best companies at a surprisingly inexpensive cost', says Hunt.

In early February the company raised its first cash, placing £1 million worth of shares with institutions and net investment funds. They liked Online's business model and growth projections. If the company grows to plan, or even only half as well as expected, it will be worth many times its current value in two years' time.