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Vivendi To Acquire MP3.com

Posted by michael on from the join-the-collective dept.

Herschel Krustofsky writes: "Vivendi Universal finally got tired of suing MP3.com and decided to buy them out. Look for MP3.com to become the platform for Duet, the new online music venture from Vivendi and Sony Music. Any coincidence this happens right after the industry puts the breaks on SDMI?"

12 of 78 comments (clear)

  1. Re:Another way to view this... by abischof · · Score: 4

    It seems that all of those indie artists on MP3.com just got sucked in by a big label. This is reminiscent of the ongoing pattern of indie labels being bought out (or fake indies being created by) the big labels.

    Of course, you can always cross-check any so-called indie labels against the RIAA Memebership List. In fact, since I don't buy CDs from the RIAA anymore (thank goodness for Century Media!), I make use of that list quite often.

    Alex Bischoff

    --

    Alex Bischoff
    HTML/CSS coder for hire

  2. Taking the MP3 out of MP3.com by acb · · Score: 3

    Anyone who has watched Vivendi Universal for a while will know that they are mortally opposed to "insecure", nonproprietary audio formats, including MP3. Vivendi would be more than happy if MP3 was wiped off the face of the Earth.

    Expect mp3.com to change its name and abandon unencrypted MP3s, either reencoding in a proprietary format, or wrapping all downloads in Universal/InterTrust's BlueMatter rights-management layer.

  3. Another way to view this... by John+Whitley · · Score: 3

    It seems that all of those indie artists on MP3.com just got sucked in by a big label. This is reminiscent of the ongoing pattern of indie labels being bought out (or fake indies being created by) the big labels.

    While the legal and financial arrangements btw the artists and MP3.com haven't changed as a direct result of this acquisition, it will be interesting to see what Vivendi does on this count (*cough* screwtheartists *cough*) in coming months.

  4. Missing the point (sturgeon's law). by landley · · Score: 5
    In any publishing industry (music, books, video), content is cheap. The real value is fighting off sturgeon's law.

    Sturgeon's law says that 90% of everything is crud. The contents of mp3.com are the same as a book editor's "slush pile", which is full of a thousand amateurs all trying to write the great american novel, and 99.5% of them really sucking at it. mp3.com has every garage band on the planet that can rune Lame or BladeEnc sending in a demo tape, and most are really awful.

    This is normal. There's great stuff out there, but you have to find it. This is why search engines exist on the web, because most web pages are terrible and pointless, and the value is in finding the good ones. That's what SLASHDOT does! (And why slashdot's comments have a ranking system.)

    That's what Red Hat or Debian does bringing out new Linux distributions, going through the hordes of code on freshmeat and such and finding the stuff that's worth including.

    Fighting off sturgeon's law is a useful service, quite possibly THE most successful business model on the web. Skimming off the cream, polishing it up, and packaging it in a shiny box. But that is -NOT- what mp3.com did.

    mp3.com did for music what sourceforge does for open source or what geocities does for web pages. It's nice, but it also rapidly fills up with unfinished or even random cruft. It's also not something people are really willing to pay for, except maybe to view advertising. The very "freeness" of it is why people use it. It's a big public canvas, blank space in which amateurs can scribble.

    What mp3.com needed, and what they never had, was an editorial board that found their top 1%, collected it together, polished it, and promoted it. THAT is the valuable service music companies have forgotten they provide. (NOT distribution, sorting through heaps of demo tapes to find talent and then, once upon a time, nurturing it.)

    Same with the motion picture industry, the point isn't that they can crank out yet another crocodile dundee movie but that they can find people like Steven Spielberg and hand him the budget to make "Jaws". These days the new talent is going to atomfilms.com or some such, and getting lost in the slush pile...

    Fighting off sturgeon's law is a service people ARE willing to pay money for. If you can ensure quality and save them time, they will pay for it. Always have, always will. The publishing industries are terrified of the web taking away their distribution role, but only because they've forgotten why they were the ones who had something to distribute.

    Rob

  5. Re:Well, there goes the indy artists on mp3.com. by victim · · Score: 5
    You mean we haven't already signed onesided contracts? My tiny little band makes nice music, but nothing that will ever be popular. Let's see what MP3.com has in their contract bag...
    1. mp3.com routinely sends us email telling us the rules have changed and these are the new rules.
    2. the pay-for-play program divides a pot of money between the artists, but mp3.com refuses to state the formula for the payout.
    3. if they believe you are attempting to trick the formula you will not be paid.
    4. a month or so ago the bands were unilaterally notified that if they wanted to earn money, they must pay mp3.com $20/month in order to be elligible to be paid. How about if your employer serves you with a $20/mo paycheck-privelege-fee?
    5. bands which are not paying their $20/mo still deplete the pay-for-play pot of money, except mp3.com keeps instead of accrueing it to the bands.
    6. it is right at impossible to get a straight answer from them on any matter.
    7. if you watch closely the song play statistics (that govern your pay through the mysterious, but presumably monatonically increasing function) will sporadically change and reduce your plays. No explanation.
    8. despite mp3.com's denials, artists complain that their band contact email addresses are used to direct marketing.


    Remember, the bands are all paying their own production costs up front. There is no mysterious development costs for guiding the bands into success. mp3.com is just a distribution chain and they manage to screw the artists at every turn.

    That all said, I still like the concept. I don't make music for money. If someone can enjoy my music, then great, go to it. mp3.com is just a nice distribution channel where I don't have to pay for the bandwidth.
  6. Any Coincidence... by brianvan · · Score: 3

    ... that this happens when mp3.com's stock price is way down and Napster's dying off?

    It could be a good business venture for them. There's a lot of original artists on there, and it's basically a seeding pool for new artists. And it's got brand name recognition, too. Maybe they have some good plans for it.

    Or maybe it's a conspiracy to take away our dear MP3 files from us and force us to rent our N'Sync from big fatcat record label honchos a week at a time. Oh well... anyone up for some non-copyrighted Mozart?

  7. Re:other news by big.ears · · Score: 4
    In other news, Microsoft got tired of the Government sueing them and decided to buy them out. Bill Gates, the new Vice President of the United States of Microsoft was quoted, "It is a perfect fit. We are both bloated monopolistic bureacracies with income derived from legally-required regularly-levied fees placed upon all citizens. For these fees, we both provide over-valued and frequently broken services. Plus, we are both headquarterd in a Washington. Together, we will provide a new level of leveraged enterprise services capitalizing on a new global market provided by our newly-achieved economies of scale." Protesters will be placated by recieving a 7 billion-dollar tax cut.

    Sorry--I couldn't resist.

  8. Is mp3.com really worth $372 Million? by lukel · · Score: 4
    I thought the internet bubble had burst. How can mp3.com possibly be worth $372 Million?

    The article says: Vivendi Universal is to acquire one of the top worldwide Internet brands. MP3.com's brand and web site are well-known to a global online gathering of music fans and artists. But $372 for a brand name, it doesn't make sense. Then there's their proprietary-patented technology for music distribution... But anyone can put mp3's on a website, and if they're any good, people will find out about them and download them. Then there's the aggregate audience ... close to 40 million registered users, but at $372 Million, that's almost $10 a user.

    It seems like the suckers haven't leant yet.

    1. Re:Is mp3.com really worth $372 Million? by sleeper0 · · Score: 3
      I thought the internet bubble had burst. How can mp3.com possibly be worth $372 Million?

      Well, I'm no stock analyst, but I worked in the industry and might have a few insights into what mp3.com has that might be valuable.

      First is their cash position. You can check out MP3.COM's 01Q1 10Q right here. They have about 90 million in cash right as of april 1st. They also have about 40 million in pre-paid multimedia licenses to the labels. They count total assets of US $190m.

      Second would be their network. Networks for serving massive amounts of high bandwdith content are difficult to build, and are valued highly by wall street and investment bankers. The process of building one from scratch is difficult, and very time consuming. Not to mention the value of having done it for some time, having worked out the kinks, monitoring systems, staffing, etc.

      Third would be software innovation. Universal recently paid millions of dollars to www.com for the farmclub jukebox project. It was lame. MP3, while perhaps not the best at what they do, has consistently developed and rolled out products that push the industry. A record of performance in software development can be worth a lot.

      Forth might be elimination of competitition. With the .com crash, mp3.com may be one of the only viable competitors left in the space. Real is locked up, microsoft has been convinced to stay out of the market for the time being. Eliminating competition is never a bad idea.

      So I don't know if they are worth $372m, but of course, that's essentially the going price. I doubt they're too worried about either the brand or the existing application. I doesn't make sense to value them on users as one would assume duet will bring it's own users.

      Just my $0.02.

  9. wonderful by NeMon'ess · · Score: 3
    Now we finally get our first look at how much the music companies think their music is worth/can gouge the consumer for. The annoying part is when Vivendi wants two dollars per song and finds almost no takers it'll cry to the world that we're all just theives out to take advantage of the poor starvings artists.

  10. It looks like a pretty good deal all around by hillct · · Score: 5
    From the article:
    The transaction has been structured as a reorganization that will be tax free to MP3.com shareholders to the extent they receive Vivendi Universal shares. Consistent with its previous statements, Vivendi Universal will not issue new common shares in this transaction, but will use treasury shares for the share portion of the aggregate transaction consideration. The Board of Directors of MP3.com has unanimously approved the transaction. Holders of more than 50% of MP3.com's outstanding shares have agreed to vote in favor of the transaction.
    MP3.com shareholders get a fair value, with tax advantages, and Vivendi aquires a valuable internet property without diluting it's currently outstanding shared, or risking any previously held positions.

    Free Music advocates might object but from a financial perspective it looks like a sound deal

    --CTH

    --
    --

    --Got Lists? | Top 95 Star Wars Line
  11. other news by zoombah · · Score: 4

    in other news, the Government got tired of their lawsuit against Microsoft, and decided to buy them out. Federal Spokesperson Robert Hausley was quoted, "Well, frankly, we'd love to get into this whole monopoly thing too. We figure that we can consolidate the "establishment" of corporate values and government enforcement with this deal. Protestors were placated by $10 rebates on Microsoft XP.