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Vivendi Will Buy MP3 for $372 Million

21 May, 2001 By: Hive News

Once on the verge of putting the corporate music industry out on the street, online music service MP3.com Inc. hasagreed to be purchased by Vivendi Universal, the world's biggest music company, for $372 million.

The three-year old San Diego-based company has been crippled by a series of lawsuits from record companies -- including Vivendi's Universal MusicGroup, which won a $53-million judgment against it.

The purchase of MP3.com allows Vivendi to incorporate an online music company with the technological infrastructure to run a large-scale music streaming service -- and technical support for Duet, the onlinesubscription service nearing launch with partner Sony Music.

Vivendi said the company'stechnology also could be used to distribute films.

MP3.com, nursing huge costs, is still one of the most popular music sites on the Web. Its viewership is up 16% from a year earlier.

"Unlike all the other initiatives you see out there,we're delivering music today," said MP3.com c.e.o. Michael Robertson, who will become a special advisor to Vivendi Universal chairmanJean-Marie Messier.

More than 90% of the company's $22 million in revenue last quarter wasgenerated by advertising, not from subscriptions to its service.

Because of lawsuits, the menu of music available throughMP3.com has been limited to unknown artists. But MP3.com has developed a database of thousands of albums for its online locker service, and has already paid more than $100 million in settlements and licensing fees to resolve copyright litigation.

However, there's no end in sight to MP3's courtroom battles. About two weeks ago a group of songwriters filed a $40.5-million case against the company.

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