AOL Buys MusicNow from Circuit City

AOL said on Thursday it bought Circuit City Stores Inc.'s digital music subscription service MusicNow LLC, a move that thrusts Time Warner Inc.'s Internet unit into competition with RealNetworks, Yahoo, Napster and other subscription services.

Financial terms of the deal were not disclosed, but a source familiar with the matter said AOL paid less than $25 million. MusicNow will offer downloads at 99 cents each, comparable to iTunes, and it will offer monthly subscriptions for $9.95 for unlimited downloads or streaming, which refers to listening to music online without downloading it.For an additional $5 a month, listeners can download songs to a compatible digital music player.

RealNetworks Inc's Rhapsody subscription service is $9.99 a month. Napster sells its service for $9.99 a month. Yahoo's service is $6.99 a month, or $4.99 a month if one buys a 12-month subscription. Last month, CNET reported that Yahoo was raising its price to $11.99 a month for users who want to download music to digital music players.

AOL currently has a partnership with Apple Computer Inc.'s iTunes, by far the largest online music service. But that partnership is aimed at members of AOL's Internet service.

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News source: Reuters

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