Vivendi Universal Buys MP3.com

	posted by Tom Romero on Monday May 21 2001 @ 04:49PM PDT
	I know it's not "technically" a CD-Baby issue, but I know that many of us use MP3.com for marketing our stuff and will likely be affected by the following news. Eight months after beating MP3.com in court, the world's largest record company announced Sunday that it is acquiring the online music provider in a $372 million cash-and-stock deal. Paris-based Vivendi Universal said the deal will advance its efforts to create an online digital music subscription service. "MP3.com will be a great asset to Vivendi Universal in meeting our goal of becoming the leading online music service provider," Jean-Marie Messier, chairman and chief executive officer of Vivendi Universal, said in a statement. Vivendi said the deal, which it called a "friendly" transaction, will help it "strongly reinforce" its efforts in "the strategic areas of online music, subscriptions, branding, technology and all its content." Vivendi said San Diego-based MP3.com's board approved the deal and it expects that more than 50 percent of the company's shareholders will vote for it. MP3.com shareholders will be paid either $5 for each share they own or receive American Depositary Receipts worth $5, or a combination of both, Vivendi said. Shares of MP3.com traded at $3.01 on the Nasdaq stock exchange at Friday's close. Shares of Vivendi Universal were up 45 cents to close at $68.15 Friday on the New York Stock Exchange. The deal was structured as a reorganization and will be tax free to MP3.com's shareholders "to the extent they receive Vivendi Universal shares," the company said. MP3.com will be a likely candidate for Vivendi Universal's Duet, an online digital music subscription service it is developing jointly with Sony Corp., said Anita Larsen, a spokeswoman for Vivendi in New York. The Duet service is expected to launch this summer with streaming music and plans to add downloads shortly thereafter. Vivendi said it will have thousands of songs on the Internet from Universal Music Group, a subsidiary, and Sony Music Entertainment available in a fee-based subscription model. Details about how the service will work and how much it will cost have not been announced. Financial terms of the deal also were not revealed. Vivendi said its acquisition of MP3.com will help it reach more than 40 million more registered users on the Internet. The online company will continue its own services while developing new offerings with its new owner, said Michael Robertson, MP3.com chairman and chief executive officer. The two companies were adversaries last year. Of five major record companies that sued MP3.com over copyright violations, Vivendi Universal was the only one that refused to settle before the case went to trial. In September, a federal court judge in New York ruled that MP3.com had intentionally violated the copyrights of the music companies, and awarded Universal Music Group penalties that could have reached as much as $250 million. Two months later MP3.com agreed to pay the company $53.4 million. Vivendi Universal owns Universal Music Group and Universal Studios, a 51 percent stake in European pay-TV provider Canal, and other holdings. I'd love to know what my fellow "baby's" think about this recent and disturbing news. Derek, I'd love to hear your take on this knowing that you've met Michael at the many music conferences you've attended. I wonder how long before they start squeezing out the independents. How long before the prices go up and the service goes down? Although we may not making millions, we do represent the competition.

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