AOL acquires MusicNow

America Online, Inc., today announced that it has acquired the business of a digital music subscription company called MusicNow LLC. The agreement was signed September 27th and closed early this week. Financial terms of the deal were not disclosed. The company was previously held by Circuit City Stores, Inc., of Richmond, Virginia.

AOL also announced that a broad public preview of the new web-based digital music service is now available ( ). AOL will be gradually upgrading current MusicNet @ AOL subscribers to the new service, called “AOL Music Now”.

Founded as “FullAudio” in 1999 and purchased by Circuit City in 2004, MusicNow will continue to be based in Chicago, Illinois. AOL Music Now will operate as a stand alone, wholly-owned subsidiary of AOL Premium Services LLC, a subsidiary of AOL in the Digital Services business unit. The company’s 40 employees, including President Gary Cohen, will report to Amit Shafrir, President, AOL Premium Services, LLC; and Ed Fish, Senior Vice President and General Manager, AOL Premium & Subscription Services.

“The MusicNow transaction allows us to superserve our AOL members and expanding web audience with a truly best-in-class, full-service, digital music platform – giving us the opportunity to offer an unparalleled music service,” said Mr. Fish in the press release. “Combined with leading programming on AOL Music, the easy-to-use features for music browsing, discovering, sharing, and purchasing of MusicNow provides a new level of customization and personalization of online music. AOL’s users have been asking for these next-generation features to be a part of their music experience – and AOL Music Now will deliver them.”

“We’re thrilled to join AOL,” said Gary Cohen, President of MusicNow in the press release. “Over the past six years, MusicNow has focused on building an easy-to-use service of unprecedented accessibility that delivers a highly personalized experience. The goal now is to become the number one music service. With AOL’s entertainment properties, scale, and marketing opportunities, we’re confident we’ll get there. It’s a powerful opportunity.”

Representing the next generation of digital music services, AOL Music Now will provide visitors with the option to browse and purchase music on an a la carte ($.99 per track) or subscription basis from any Internet-connected PC, without downloading separate media player software. Subscriptions to the new service will be available for $9.95 per month for unlimited streaming and downloading to a computer, or $14.95 for unlimited streaming and downloading to a computer and any ‘PlayForSure’ compatible portable music device. Songs can be managed with a Windows Media Player, or compatible player.

The AOL Music Now service will also offer unique personalization features, such as daily custom playlists and community features, such as the ability to view and share music profiles with other visitors. The service will be integrated with the portal ( ) and AOL Music ( ).

MusicNow carries a complete digital music collection of over one million songs from the four major music labels – EMI, Sony/BMG, Universal Music Group, and the Warner Music Group. It has also been successful at building relationships with an expanding list of independent labels — including V2, Rounder, Epitaph, Tommy Boy, Roadrunner, Blue Note, The Orchard, and Astralwerks.

During the current AOL Music Now preview period, existing subscribers to both the MusicNow and the MusicNet @ AOL services will be notified via email that they will be upgraded to the new AOL Music Now service in the coming months. Subscribers to each of these services will maintain their current, respective price plans under AOL Music Now. New subscribers to AOL Music Now can select from one of two price plans ($9.95/month or $14.95/month).

MusicNow, LLC is AOL Inc.’s fourth announced corporate acquisition in 2005 – following the acquisitions of Weblogs, Inc. in September, and Xdrive, Inc. and Wildseed, Ltd. in August.

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  1. “Is my iPod compatible with music purchased from AOL Music Now?

    Song downloads from AOL Music Now are delivered in Windows Media Audio (.wma) format, and are compatible with portable music players that support that format. They cannot be transferred to or played on an iPod.”

    Bit of a non-starter then isn’t it?

    MW: should have “known” that would happen…

  2. AOL? I’d call it Case closed. TimeWarner was so proud they dropped AOL from their name. Keyword: obsolete.

    (Puns are always intended. Just keep the Play Fair.)

    MW: hours – MusicNow’s life span can be measured in . . .

  3. I suppose you could use Windows media player to play the music on your Mac and use an audio capture program like AudioX or AudioHiJack to make MP3s. It’s probably illegal because you are essentially stripping the digital rights protection of the music.

  4. First, 200 no name MP3 manufacturers in China closed their doors, then Rio sold out, then MusicNow is acquired by AOL and will be glommed together with AOL’s MusicNet.

    Napster should be next, followed by Rhapsody, then Creative.

    MDN Word: leave. How do they do this?

  5. “…MusicNow has focused on building an easy-to-use service of unprecedented accessibility…”

    Hmm…it doesn’t work with iPods or Macs, yet iTMS works with both plus Windows. What is their definition of unprecedented accessibility? If anything, it’s “precedented accessibility” because it’s accessibility is exactly like all the other iTMS competitors.

  6. This to me is a bit confusing as isn’t the current method of downloading music on AOL via the iTunes Music Store (iTMS)?

    Don’t forget that AOL still has a lot of customers that subscribe to a varying myriad of broadband & dial up packages the world over. Not myself incidentally.

    I doubt that those AOL customers, at this stage, will dump their iPods in favour of the nearest (read: distant) rivals player that is .wma compatible so that they can use the AOL Store as to them this is included in their subscription so why go elsewhere other than to another ISP.

    If it is the case that AOL want to move away from iTMS and instead offer their own music download store that is not iPod compatible and as many of you here have noted that this is a non-starter for AOL that begs the question as to why buy out MusicNow other than to asset strip. This is to then only suggests a service in order to disguise AOL’s true intentions to the latter.

    Perhaps Steve Jobs’ method of deny then only to confirm at a later stage has rubbed off on other major corporations. See video iPod for instance.

    Maybe Apple Computer with their majority lead will now open the iPod to .wma formatted files and thus take a tigher grip on the portable music player market. The iPod would then be truely a one device fits all, although questions of monopoly could arise in respect to that.

    As for iTMS it is conceivable that this aspect of the iPod experience would be the first to suffer from competition as I have seen an appearence of AAC being mentioned on other devices not made by Apple computer. These are not necessarily MP3 players.

    Yes iTMs still offers the best service in terms of legal flexibility such as burn to as many CD’s as you wish along with an unlimited amount of iPods and upto 5 computers for playback/storage.

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