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MS to spend $15 million buying into online music market

Stake in Reciprocal to strengthen digital music delivery offerings

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Microsoft is to announce a $15 million stake in digital content delivery specialist Reciprocal. The stake amounts to 15 per cent of the privately held Reciprocal, which is expected to launch an IPO sometime during the next couple of years, according to a report in today's Wall Street Journal. On Microsoft's mind is the need to clearly improve its e-commerce offerings. "The purpose of this investment is to help build the infrastructure for the emerging market of digital goods commerce," said Microsoft's senior director for business development and strategy, Will Poole, quoted in the WSJ report. Reciprocal's particular field of expertise is the management of rights for various media. That's a core component of any e-commerce system designed to deliver music and video across the Internet. While Microsoft has technology to track the transfer of content from merchant to customer and to handle the numerous credit card transactions surrounding the download. The Reciprocal deal adds the software necessary to ensure artists and publishers get their cut of the deal. Reciprocal's president and CEO, Paul Bandrowski, said the deal was "great news for the entertainment industry". He may have a point (from a copyright protection perspective), but whether the entertainment industry, particularly the music business, will see it that way is another matter. If there's one thing that worries the major labels more than MP3, it's the thought of Microsoft grabbing a large share of their business. ®

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