Online Audio Starts Week With More Alliances

The online audio business continues to be a ripe field for mergers, joint ventures and strategic investments, judging by announcements from two audio download companies Monday. EMusic.com (Nasdaq: EMUS) struck a distribution deal with America Online Inc. (NYSE: AOL), while AudioSoft International lined up strategic investments from several computer and technology companies, including Macrovision and Logitech.

EMusic.com will offer downloadable music on America Online’s ICQ, Spinner and Winamp services. Under the non-exclusive, three-year agreement, EMusic.com will pay AOL a fixed marketing fee and a share of the revenues for transactions on AOL’s sites. AOL will also receive purchase warrants for EMusic.com stock, which opened trading Monday at $19.13 per share.

The companies said they will cross-promote digital audio downloads through links on each other’s sites, advertising and other marketing efforts. EMusic.com also agreed to develop co-branded audio sites with ICQ, Spinner and Winamp.EMusic.com has a collection of more than 20,000 songs. The company sells downloadable music by the individual song for 99 cents each or by the album for $8.99. EMusic.com, founded in January 1998, uses the MP3 format to distribute digital music on its Web site.

ICQ, Spinner and Winamp have accumulated 50 million regular visitors between them, according to AOL. ICQ is a real-time Internet chat and e-mail service that notifies users when certain friends or associates are using the Internet. Users download a specially designed ICQ Web browser that enables them to chat, send messages and files and play games with others while surfing the Internet. Spinner.com is one of a growing number of online music sites. AOL claims Spinner.com is the first and the largest online source of downloadable music, with more than 100 channels of pre-programmed music, similar to radio stations without the commercials or DJs between songs. WinAmp.com is a downloadable music player.

More Deals

Meanwhile, AudioSoft announced Monday it raised $13 million in private equity financing. In its third round of passing the hat, the online audio distributor brought in $1.5 million from Macrovision Corp. (Nasdaq: MVSN), a copyright protection technology company. Macrovision will also provide strategic marketing and technical consulting services and will work with AudioSoft to expand its technologies into the video domain, where Macrovision first cut its teeth. Macrovision is best known for its video copy protection technologies that are used by Hollywood studios and others to deter unauthorized copying of prerecorded videocassettes, DVDs and digital PPV programs via satellite and cable.

In addition, AudioSoft garnered an unspecified investment from Logitech (Nasdaq: LOGIY), a developer of computer peripherals and interface devices. Logitech also agreed to bundle AudioSoft’s Virtuosa, a downloadable computer jukebox, with several new Logitech interface devices for audio and multimedia programs. Logitech’s interface products include Internet video cameras, input and pointing devices such as mice, trackballs, keyboards and scanners, multimedia speakers and entertainment products.

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