Universal Music Group has confirmed it will acquire online music company EMusic.com for an estimated $24.6 million.
Universal Music Group, which is owned by Vivendi Universal, will pay cash for all of EMusic's 43.2 million shares of stock priced at $0.57 a share, the companies said in a statement Monday. Vivendi is partnering with Sony Music Entertainment in an online music venture called Duet, which will offer subscription-based digital downloads and streams.
Fee-based online music subscription services are becoming all the rage with the major record labels. Several of them recently announced they are putting together their own such services. All intend to charge a fee, as does the ever-popular and ever-beleaguered Napster music service.
The Washington Post last week quoted an unnamed source saying that EMusic would become a distribution site for Duet music. EMusic acknowledged last week that it had agreed to be acquired. Grace Salafia, a spokesperson for Universal Music Group, told IDG News Service on Monday that the Washington Post report about how EMusic will be incorporated is "speculation" and said it is "premature" to comment on plans for EMusic.
In the deal, Universal Music Group will gain the rights to the RollingStone.com site and brand, EMusic's 165,000-track music collection, its estimated 10,000 subscribers, and jazz site DownBeat.com, Salafia says.
EMusic is strapped for cash and is losing the online music war to Napster's music service. At the end of March, the company reported it had $10.9 million. Shares of EMusic traded up $0.09, or 21 percent, to $0.53 a share at midday Monday.