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Yahoo! snaps up Musicmatch

$160m cash purchase to propel digital music market entry

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Yahoo! is to buy digital music company Musicmatch for $160m in cash, the two companies said today, to springboard the portal's own entry into the emerging online music business.

Musicmatch launched in the late 1990s as a subscription service, but opened an a la carte download store last year largely in response to Apple's iTunes Music Store.

Since then it has partnered with Dell to power the PC maker's own digital music service, and is said to have almost reached a similar agreement with HP until the latter made a last-minute switch to Apple. Sony has a long relationship with Musicmatch, bundling the latter's jukebox software with its optical drives, and more recently with the HMP-A1 hard drive-based MP3 player it offers in Japan. Many other MP3 player, optical drive and other computer component makers bundle Musicmatch Jukebox.

Whether these relationships continue following the Yahoo! takeover remain to be seen. Certainly, the acquisition is not expected to be completed until Q4.

While Musicmatch has got its software in front of tens of millions of PC users - in part through a strong retail presence, but mostly through its bundling deals - its music store hasn't won the mindshare that rivals Napster and iTunes have achieved. With Yahoo!'s branding behind it, that may change.

For its part, Yahoo! said the deal "bolsters our strategy to capture the largest audience of consumers as they make the shift to digital music" and to become "a major player in digital music".

"Our goal is to give consumers the music they want, how they want it, anywhere they want it," said Yahoo!'s music chief, David Goldberg. So presumably we can look forward to Mac and Linux versions, eh, David? No, thought not.

The deal also increases Yahoo! scope to serve ads, and potentially provides it with a bigger audience to show those ads to. ®

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