It seems that with all of the legal issues surrounding file-swapping and other forms of downloadable music files, companies right and left are teaming up to be the “first” to debut a platform that is not only legal, but can serve as a model for future services. Software companies and labels from the Big Five have been teaming up in the past couple of months to forge a new superhighway that lets music lovers download music legally, without infringing on copyright laws.
Universal Music Group and EMusic.com Inc. have signed a merger agreement, whereby UMG will purchase EMusic's outstanding shares for $0.57 per share, valuing the company at $23 million. EMusic, which had problems launching its music subscription service that charged $9.99 a month for unlimited downloads, holds a catalog that amounts to nearly 13,000 albums, mostly from independent labels. In addition to the catalog, UMG will pick up EMusic.com-controlled RollingStone.com and DownBeat.com. UMG plans on using EMusic's distribution platform for its upcoming online music subscription service, Duet, with partner Sony Music Entertainment. Duet will launch through Yahoo! this summer.
RealNetworks joined up with AOL Time Warner Inc., Bertelsmann AG and EMI Group to create a platform for online music subscription services. Dubbed MusicNet, the service will host a collection of downloadable and streaming music that can be used across a number of networks. EMI, Bertelsmann and AOL Time Warner will each own a minority stake in MusicNet, which will function as a separate company, and none of the distribution deals garnered with MusicNet are exclusive. On May 1, it was announced that the long-anticipated merger between EMI and Bertlesmann AG was scrapped due to regulatory concerns. (The EMI-BMG merger would control more than 25% of the recorded, music market worldwide.) Sources at both companies said that the online service will not be affected.
Napster update: The file-swapping service was back in court on April 10, where it announced that it was acquiring Gigabeat.com for an undisclosed amount, though the deal will incorporate its assets. Gigabeat's music indexing technology will be incorporated into Napster's service to aid in locating and excluding illegally distributed music files from its servers. Gigabeat's co-founders, Dr. Wilburt Labio and Dr. Narayanan Shivakumar, as well as the company's engineering crew, will join Napster's staff.