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AOL buys into MP3 arena

$400 million to be spent acquiring WinAmp developer and Spinner.com

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AOL's quest for content took another step forward yesterday with the surprise acquisition of online music broadcaster Spinner.com and MP3 specialist Nullsoft, developer of the WinAmp MP3 player. Both deals will be made through stock-swaps, together valued at $400 million. And if Playsoft's $20 million copyright infringement suit against Nullsoft comes off, the acquisition could cost AOL more. AOL will essentially rebrand both purchases' products and services under its own name. The motivation here seems as much about spreading the 'AOL Anywhere' message as adding technology to the company's core online service. The deal also suggests AOL's view of the ongoing digital music format wars has it that the MPEG audio format, MP3, will continue to be a force in the market despite the music industry's problems with it. Spinner.com, on the other hand, uses RealNetwork's RealAudio format, so AOL's move can be seen as covering as many bases as possible yet at the same time actively avoiding support for Microsoft's play for the digital content market, Windows Media Technologies. Given the enthusiastic predictions for the way the online music market is going to explode -- initially through CD sales but soon after by direct download -- it's no wonder AOL wants a part of it, and Spinner.com gives it both. The success of the venture will, however, depend on the support of the major music companies -- whether they will sell exclusively direct or sell through third-parties too. The deal with Nullsoft, meanwhile, also brings to AOL the developer's ShoutCast Internet 'ham radio' software, which allows anyone and their dog to become an online radio station. It's a popular program, and it's not hard to imagine all those listeners suddenly being beamed AOL advertising while tuning in to their favourite Net stations. ®

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