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Vivendi embraces old foe
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May 21, 2001: 11:15 a.m. ET
Purchase of MP3 gives it ammunition to battle online music rivals
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LONDON (CNN) - Vivendi Universal's acquisition of MP3.com for $372 million unites two former foes in a battle for supremacy among online music networks.
The deal, announced Sunday, links the world's largest music conglomerate with a company that boasts the biggest collection of digital music on the Net, with nearly a million songs and audio files posted on its Web site.
"This is the music industry finally waking up to the way the Internet is going. This is their attempt to get their leg up into the Net," said John Maroney, an analyst with the Ovum consultancy.
The major labels have failed so far in their combined efforts to popularize a technology that can deliver music over the Net with copyright protections intact. Their joint venture, the Secure Digital Music Initiative (SDMI), has made little impact since it was formed in 1998.
The trend now is to learn from the online companies they once considered pirates. Vivendi buying MP3.com follows Bertelsmann's BMG Entertainment's alliance with Napster to launch a subscription-based online music service.
On Friday, the U.S. Congress saw a demonstration of MusicNet, a subscription service due to launch in August that will allow users to download music from three of the big five record labels – AOL Time Warner, Bertelsmann and EMI Group. AOL Time Warner is the parent company of CNNfn.
It previously had seen a similar service called Duet, which should debut at the same time and is backed by Vivendi Universal, Sony Music and Yahoo! MP3.com engineers now will help with its development.
Only six months ago, a judge ordered MP3.com to pay Universal $53.4 million in damages for violating its copyright when it offered music by Universal artists over its Web site.
My.MP3.com allowed users to beam details of CDs in their own collections to the site so that they could listen to audio-file versions on whatever computer they were working on. They also could listen instantly to any CD they had bought online.
Ironically, Universal was the only major record company not to settle with MP3.com over the digital copying of its catalogs before the dispute went to court. And it now says the very technology it sued over will help Duet.
"With MP3.com's proven technologies and team, we'll have the tools and talents to aid the success of this and other digital content distribution ventures," Vivendi Universal CEO Jean-Marie Messier said. 
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