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Yahoo! Acquires Musicmatch For $160 Million

Staff Writer
Published: 2004-09-14

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Yahoo and Musicmatch announced they have signed a definitive agreement under which Yahoo! will acquire Musicmatch for a purchase price of approximately $160 million in cash.

"Yahoo! is committed to being a major player in digital music," said Terry Semel, chairman and chief executive officer, Yahoo! Inc. "This combination bolsters our strategy to capture the largest audience of consumers as they make the shift to digital music and supports Yahoo!'s goal to give consumers the greatest choice, control and flexibility in how they interact with their music. This acquisition is one of several product innovations and new initiatives in which Yahoo! will invest to build our music portfolio this year and in the future."

Founded in 1997, Musicmatch pioneered complete digital music management technology. Its assets include Musicmatch Jukebox software, which allows consumers to play, burn, download, discover, and organize an entire music collection; the online Musicmatch Radio network, which offers free and premium streaming access to more than 900,000 songs and more than 200 pre-programmed stations; and the Musicmatch Music Store a la carte song download service, which offers access to more than 700,000 tracks. Most recently, the company introduced the Musicmatch On Demand streaming music subscription service, providing unlimited access to more than 700,000 songs from any computer as well as legal music sharing through its innovative "Send to a Friend" feature. The Musicmatch Jukebox is available in ten languages, including Spanish, French and German.

The combination will substantially increase Yahoo!'s music reach from 12.9 million to an estimated 23 million listeners (Source: Nielsen//NetRatings, August 2004). This extensive reach within an active and engaged music audience will make Yahoo! even more compelling for advertisers and record labels.

"Our goal is to give consumers the music they want, how they want it, anywhere they want it. We believe Musicmatch provides a great music experience that will further extend our offerings. The combination of our strengths will help us execute on our vision of providing music fans the best and broadest suite of music products and services, from discovery to distribution to music management," said David Goldberg, vice president and general manager, music, Yahoo!. "This acquisition also gives Yahoo! a strong position in the digital music business, in both ad-supported media, such as radio and music videos, and on-demand distribution, with subscriptions and downloads."

Additionally, Yahoo! will gain a talented team with considerable expertise in digital music technology, complementing the strengths of our existing team and accelerating its future innovation capabilities.

Digital music sales are expected to grow rapidly in the near future, particularly with the increasing availability of broadband access. Music subscription sales are expected to grow from $113 million this year to $890 million in 2009, while digital downloads are anticipated to reach $803 million in 2009, compared to $158 million for 2004 (Source: Jupiter Research).

"We are very pleased to be joining the Yahoo! family," said Dennis Mudd, CEO and founder, Musicmatch, Inc. "By combining assets with LAUNCH, we believe that Musicmatch will have an even stronger position to take advantage of the rapidly growing digital music segment."

Upon completion of the acquisition, Musicmatch will become a wholly-owned subsidiary of Yahoo!. The transaction is subject to customary closing conditions, including regulatory approval. It is expected the transaction will be completed during the fourth quarter of 2004.

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