Feeds

Major labels sell off MusicNet

No longer interested in doing digital distribution themselves?

  • alert
  • submit to reddit

High performance access to file storage

Global digital music distributor MusicNet has been sold by its music industry owners to a venture capital firm.

Terms of the deal were not disclosed, but since MusicNet was privately held, that's no great surprise. The new owner is Baker Capital, a New York-based private equity firm founded in 1995. The firm specialises in "digital communications companies" and has a portfolio worth $1.5bn. It apparently chose MusicNet after evaluating a number of digital music companies, it said, though it didn't name names.

For MusicNet, which will continue to operate as an independent company, the deal gives it access to financial resources it could not expect its former owners to provide. The takeover will give it the funding it needs to expand, to license more content and take that content to more big-name retail partners, it said.

MusicNet was founded in 1999 by EMI, AOL, BMG and RealNetworks, but not formally launched until 2001. It later won the backing of Sony Music - now Sony BMG - and Time Warner 'acquired' AOL's stake in MusicNet when the two companies merged. RealNetworks later dropped MusicNet for Listen.com, which it acquired in 2003, though it retained its stake in the distributor.

Since then the digital music landscape has changed considerably, and the majors have largely lost their desire to control the distribution of digital music to retailers. They've found themselves working with a range of distribution partners and firms who combine distribution and retail into a single operation, like Apple's iTunes Music Store and Napster. Either way, the labels now seem to prefer not to compete with companies like these, and that may well be what encouraged them to sell to Baker.

Baker's goal is to push MusicNet to the forefront of the digital music business, it said, to make it the "dominant player". MusicNet's retail deals with AOL, Virgin Digital, Trans World Entertainment and others, has netted it over 500,000 subscribers around the world - more than Napster. It also maintains it has a larger selection of music than Napster, iTunes or anyone else: more than 1.3m tracks, to be precise.

That, it hopes, will allow it to win more business from retailers who want to sell digital music downloads but don't want to become mired in content licensing. One such is UK music retailer HMV, which this week said it had selected MusicNet for its second-generation download service in place of its current partner Loudeye/OD2.

The pure-play distributor's dilemma is that its business is at the mercy of the retailers' ability and/or willingness to promo their own services. That's certainly been an issue in the past, but as iTunes and Napster have driven public awareness of digital music, that's having a knock-on effect on other retailers. Hence HMV's willingness to spend £10m on its second-generation download service. And with greater awareness comes greater spending, so Baker may feel MusicNet can generate solid returns even if the public have never heard of it. ®

Related stories

HMV swaps digital music partners
Institutions pour $25.2m into digital music firm
HMV to spend £10m to catch up with Napster, Apple
MusicNet to deliver music downloads to UK
Virgin to open music download service
RealNetworks drops MusicNet for Listen.com
AOL intros US-only music service
EMI, BMG, AOL define universal Net music scheme

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Nokia offers 'voluntary retirement' to 6,000+ Indian employees
India's 'predictability and stability' cited as mobe-maker's tax payment deadline nears
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
Adrian Mole author Sue Townsend dies at 68
RIP Blighty's best-selling author of the 1980s
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Analysts: Bright future for smartphones, tablets, wearables
There's plenty of good money to be made if you stay out of the PC market
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.