AOL buys music sites - MP3 delivery planned

America Online announced Monday it is to add music to its content portfolio with the acquisition of an Internet radio company and a developer of MP3 software. The Spinner Networks and Nullsoft buy will be music to the ears of MP3 afficianados and could set AOL up as a major player in Internet music retail experts predict.

The ISP paid a total of $400m (£245m) in stock for the companies. AOL, CompuServe and Netcentre customers will benefit from downloadable music and live Internet radio following completion of the deal, expected by the end of the summer. Software for downloading MP3 will be embedded in all AOL's online services although no timetable was offered.

"Internet music is beginning to take off", says a spokesman for AOL. "We aim to make it even easier for consumers to listen to Internet music and take it to a mass market." The spokesman denies jumping on the MP3 bandwagon is a controversial move: "From our point of view we certainly take copyright protection very seriously and plan to work with the music companies to make sure Internet music is secure," he claims.

Jupiter analyst Noah Yasskin believes the acquisition of content will become increasingly important for portals like AOL. "With Web sites like etrade [a financial services site] and CNN becoming rivals to the portals it is vital they keep traffic and users by developing content. It makes sense for AOL to have a strong presence in music and other content," he says.

Consultant with Media Research Information Bureau (MRIB) Martin Brass agrees and says AOL linking itself with MP3 will do "wonders" to validate the format. "AOL getting involved with MP3 will truly legitimise it and force the major [record] labels to jump into that arena. All it will take is a few major players to stick their necks out to force others to jump over the line," he says.