In its second-largest acquisition, Amazon buys the company for $970 million.
It’s been a big spring for duets in the world of online music sales. First came the March 17 merger of CDnow Inc. and N2K Inc., who rang up sales to the tune of $98.5 million in 1998. They’re teaming to fend off Amazon.com, which rushed the stage with its offerings last summer and posted fourth-quarter music sales of $33.1 million.
But now the big boys want to play. BMG Entertainment and Universal Music Group, which together control 45% of the domestic music market, announced in April that they would join forces to create the No. 1 music destination on the Web-getmusic.com, which will be up and running by summer.
It’s a significant move for Montreal-based Seagram, whose recent $10.4 billion acquisition of PolyGram NV vaulted Universal to the top of the charts with a 23% share of the global music business. But the company lacked an established Web selling presence-unlike BMG, which created getmusic.com last year as an e-commerce extension of five genre-based online music communities.
While getmusic will sell music from all labels, BMG and Universal will have access to extras from such popular acts as Backstreet Boys, Dave Matthews Band, Shania Twain and U2. Since the companies plan to sell their music at full retail price, the service expects to win over fans by equipping the sites with chat rooms, interactive Web casting, and message boards.
Such exclusives are shaping up as essential marketing tools online. CDnow is building on its alliances with MTV and VH1. And Amazon is trying to lure customers with digital downloads from the new live album by Lilith Fair chanteuse Sarah McLachlan-who records, curiously enough, for BMG-owned Arista.