Listen, Road Runner Enter Into Distribution Deal


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Listen, Road Runner Enter Into Distribution Deal

Wed Jul 31, 2:01 PM ET

By Sue Zeidler

http://news.yahoo.com/news?tmpl=story2&u=/...runner_dc_1&e=2

NEW YORK (Reuters) - Road Runner, a high-speed Internet service owned by AOL Time Warner Inc. has reached a deal to distribute Listen.com's Rhapsody online music subscription service, the companies said on Wednesday.

The deal coincides with a similar deal between Listen.com and Hughes Electronics Corp.'s DirecTV Broadband unit, which should be announced as early as Thursday.

"Together, these deals demonstrate our focus on the broadband market," said a spokesman for Listen.com, which recently became the first commercial Internet music service to sign licensing deals with all five major music labels.

Hughes and Road Runner were not immediately available for comment.

These distribution deals are significant in that they join major high-speed, or broadband, service providers with a music subscription service like Rhapsody, which provides a wide assortment of digital music on demand.

Microsoft Corp.'s MSN Network distributes an online music service called Pressplay, but most of those subscribers have dial-up connections. Microsoft, however, is also making a major push into broadband.

Listen.com competes with major label-backed services like MusicNet and Pressplay. Another online music rival is an independent company called FullAudio. All of the services face the uphill battle of luring a base of consumers who are accustomed to getting music for free from unauthorized file-sharing services like Napster ( news - web sites), Morpheus, and Kazaa.

With their deals, both Hughes and Road Runner hope to whet subscribers' appetite for other content and multimedia services, like video-on-demand.

Hughes' DirecTV Broadband service has about 133,000 subscribers. Industry experts said the initiative comes as the company seeks to boost its Internet business.

Time Warner Cable's Road Runner broadband service will send e-mails Thursday to all of its 2.5 million subscribers offering them a free one-month trial of Rhapsody, sources said. The service recently launched on the Road Runner membership site.

San Francisco-based Listen.com's Rhapsody service has signed licensing deals with all five major labels, including Bertelsmann AG ( news - web sites)'s BMG, EMI Group Plc ( news - web sites), AOL Time Warner Inc., Vivendi Universal, and Sony Corp ( news - web sites).

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Analysts said the deals have the potential to be huge revenue boosts for Listen.com because broadband customers have a greater propensity to sign onto music subscription services since broadband offers greater speed, clarity and convenience than narrowband.

"I think it's quite significant," said Phil Leigh, analyst with Raymond James & Associates. "This is the first opportunity that a broadband ISP has to really start ringing the cash register with multimedia content."

Leigh said a much higher proportion of broadband customers were likely to sign up for the Rhapsody service than dial-up subscribers.

"I would say the percentage of subscribers that Listen would get out of a 10 million narrowband (dial-up) subscriber ISP would probably be roughly the same they can get out of the 2.5 million on Road Runner," he said.

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