Search engine giant Yahoo (www.yahoo.com) announced on September 14 that it is acquiring the digital music specialist Musicmatch (www.musicmatch.com) for $160 million in cash. The Sunnyvale, California-based company said that the buyout will help it expand its presence in the simmering online music space, where Apple Computer's iTunes service has proven the segment's potential by selling over 125 million songs, typically at 99 cents apiece.
In July, Musicmatch launched a new version of Jukebox that added a search engine for browsing tracks and that also let customers rank music searches by popularity. The feature was designed to let people buy and manage music that's downloaded, recorded from CD or streamed on demand. Musicmatch allows subscribers to share complete playlists or individual songs, which recipients can listen to up to three times without officially subscribing to its download or streaming services.
Jumping into music downloads signifies a switch from Yahoo's past music strategy, which has focused on streaming audio and video through Launch, a subsidiary that Yahoo bought for $12 million in 2001. Yahoo also distributes the Napster music service, which lets customers buy music downloads and sign up for subscriptions.
Terry Semel, chief executive of Yahoo, said that Yahoo is committed to being a major player in digital music, and that that combination bolsters Yahoo’s strategy to capture the largest audience of consumers as they make the shift to digital music. In addition, Yahoo said the Musicmatch deal is one of several new initiatives in which it will invest to expand its music portfolio in 2004.
