RealNetworks seeks buyout

RealNetworks has agreed to buy for about $36 million in cash and stock, a deal that could alter some key alliances in the online music business.

The two companies announced an agreement Monday, under which RealNetworks will pay $17.3 million in cash and 4.1 million shares of stock for privately held Listen. Real had already taken a minority stake in the San Francisco-based company in February. The companies said that bringing Listen's online music subscription service, dubbed Rhapsody, closer to RealNetworks' RealOne product will help both services in the market--despite the fact that Rhapsody technically competes with a rival that is partly owned by RealNetworks.

"We see this as doubling down on our business," RealNetworks CEO Rob Glaser said in a conference call with reporters. Listen has spent more than $100 million over the years, creating a service that Real would be hard-pressed to recreate on its own, he added. The acquisition is perhaps most notable for the shadow that it casts on RealNetworks' ongoing relationship with MusicNet, the rival subscription service it helped create in 2001, and in which it is still a near-40 percent owner. Real is a joint owner of MusicNet with Bertelsmann, AOL Time Warner and EMI Group.

MusicNet recently launched a new version of its year-old subscription service, along with America Online, offering what reviewers said was a flawed but vast improvement over its previous incarnation. RealNetworks continues to offer the older version, however, and stopped short of saying it would upgrade to the new MusicNet technology.

News source: C|net

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