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AOL buys 2 firms for a song
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June 1, 1999: 3:09 p.m. ET
Online giant taps hot online music biz, pays $440M for Nullsoft, Spinner
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NEW YORK (CNNfn) - Hoping the hits will keep on coming in more ways than one, America Online Inc. unveiled two purchases Tuesday worth $400 million that will boost its presence in the hot Internet music business.
The Dulles, Va.-based company said it will buy Internet music service Spinner Networks Inc. and Nullsoft Inc., a maker of software that allows users to hear music via the Web using the MP3 streaming system, for about $400 million in stock .
AOL said the purchases of the companies, which are privately held, will be accounted for as a tax-free pooling of interests.
The MP3 system, which allows for free downloading of music, has raised eyebrows in recording industry circles because the threat of piracy that could cut into revenues of the major labels.
For its part, AOL lands several sources of revenue, said Ted Leonsis, president of the company's interactive properties division, in an interview. They include audio advertisements, along a radio model, and as a commerce play to sell compact disks online, he said.
The deals are likely to pit AOL against the main purveyors of Internet music, such as the music aggregator Broadcast.com (BCST), which is being bought by top portal Yahoo! (YHOO , and the audio streaming software maker RealNetworks (RNWK).
AOL said Spinner.com draws 1.5 million unique users every month and broadcasts 2 million songs a day.
Nullsoft is the developer of Winamp, a leading MP3 player, and SHOUTcast, an MP3 streaming audio system, in addition to a variety of freeware.
Like many other Internet stocks, shares of America Online (AOL) were lower, down 3-3/4 to 115-1/2 at around 1:30 p.m. ET on Nasdaq. 
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