Yahoo spends $160m to take on iTunes and co

Yahoo is buying music software and services company Musicmatch for $160m in cash as it prepares to make a splash in the digital music arena.

The firm said that the acquisition is one of several new initiatives which it will use to build its music portfolio "this year and in the future".

Chairman and chief executive Terry Semel wants to commit Yahoo to being a major player in digital music.

"This combination bolsters our strategy to capture the largest audience of consumers as they make the shift to digital music," he said in a statement.

But Yahoo is likely to face stiff competition from rivals such as Apple with its iTunes service, RealNetworks and Napster.

Musicmatch's Jukebox software allows consumers to play, burn, download, discover and organise their music collection.

It also has an online Musicmatch Radio network, which offers access to more than 900,000 songs and 200 stations, and the Musicmatch Music Store which has 700,000 tracks available for download.

The company also recently introduced the Musicmatch On Demand streaming music subscription service.

Yahoo claimed that the deal will increase its music reach from 12.9 million to an estimated 23 million listeners.

The company cited figures from Jupiter Research predicting that music subscription sales are expected to grow from $113m this year to $890m in 2009, while digital downloads are anticipated to reach $803m in 2009, compared to $158m in 2004.

The transaction is expected to be completed during the fourth quarter of 2004.

See also:

Virgin takes on iTunes with music download service

US Virgin Digital site offers one million tracks for 99 cents each  27 Sep 2004

Consumer watchdog hits out at iTunes pricing

UK downloaders pay more than their French and German counterparts  15 Sep 2004

Market hots up with Napster To Go

Service offers unlimited tracks from Napster catalogue to compatible MP3 players  03 Sep 2004

Microsoft takes a bite at Apple iTunes

Online music service launched in the US  02 Sep 2004

Music download sites on test

Online music services are back in business but this time you have to pay. We look at seven sites to see what you get for your money  12 Jul 2004

Legal music downloads

The music industry has finally worked out how to make money out of internet music downloads. But will legal online music services be as popular as P2P sites?  18 Jun 2004

MP3 players on test

Portable MP3 players are the accessory du jour. Succumb to temptation with our round-up of these tiny objects of desire.  10 Jun 2004

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