AOL Adds Music, Now

AOL expands its music subscription services via a buyout of MusicNow from retail chain Circuit City. MusicNow will operate alongside AOL's audio search and download features, and offer a full range of music delivery applications.

America Online Inc. announced Thursday that it has acquired online music subscription service MusicNow from retail chain Circuit City in an effort to expand its audio presence into portable devices and beyond its existing customer base.

The subsidiary of Time Warner Inc., based in Dulles, Va., did not disclose any terms of the deal, but said that it reached an agreement for MusicNow with Circuit City in late September before finalizing the acquisition this week.

The music service has been re-launched as AOL Music Now, and will augment the firms existing MusicNet@AOL package. Company representatives said that all of AOLs 450,000 MusicNet customers will be eventually upgraded to the new service.

With MusicNet, AOL had been offering streaming audio, song downloads and online radio to subscribers of its ISP services, and people who signed up for the package through its Web portal.

By adding MusicNow, the company is moving to target the wider Internet audience with a full range of music services, including subscriptions and a la carte song downloads, in the mode of Apple Inc.s market-leading iTunes service and software.

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The effort will also integrate with the companys XM Satellite Radio on AOL Radio offering.

Company spokesmen labeled the move as AOLs bid to solidify its position in the online digital music market and highlighted the fact that the acquisition also allows the company to offer downloads to users of mobile devices, as MusicNet had no such capability.

AOL Music Now provides software to customers for playing content either on a PC or handheld MP3 player, without needing a multimedia application from a third party vendor such as Microsoft Corp. or RealNetworks Inc. to do so.

Despite launching the competing service, spokesmen said that AOLs portal will continue to offer direct access to iTunes for its subscribers, as it has done for the last several years. AOL wouldnt comment on how many subscribers MusicNow currently boasts. All 40 of the companys employees will move over into AOL, but the company said the operation will continue to be based out of Chicago.

Media representatives from Circuit City, Richmond, Va., didnt immediately return calls seeking additional details on the MusicNow operation, or the retailers decision to sell the music service.

Circuit City acquired MusicNow, which had formerly been named FullAudio, in March of 2004. In addition to giving the retailer the ability to market music downloads, the service also sold subscriptions and downloads through other vendors, including SBC Communications Inc.

AOL is offering a free 30-day trial to the new Music Now package, with downloads available at a 99 cents per track. After the promotion, it will sell subscription services through the site for $9.95 per month for unlimited streaming and downloading to a computer, or $14.95 per month to push downloads to compatible wireless music devices, along with 99 cents per song downloads.

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The Music Now software works with any device that utilizes the PlayForSure audio applications standard.

Like other download and subscription services, AOL Music Now will also seek to draw users with personalization features including play lists and community areas for people to interact with other members, or recommend songs and albums.

Music Now has existing content agreements with EMI Music, Sony BMG Music, Universal Music Group and the Warner Music Group, in addition to a range of independent recording companies.

The expanded music effort stands as AOLs latest move to increase its presence beyond its existing customer base, as its ISP business continues to lose subscribers.

In addition to acquisitions meant to draw more consumer eyeballs online, such as its buyout of in September, industry giants Google and Comcast are reported to be in serious talks to buy a minority stake in AOL, which could dramatically expand the companys reach.

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