This story was written by Keith Dawson for the Industry Standard's Media Grok email newsletter. It is archived here for informational purposes only because The Standard's site is no more. This material is Copyright 1999-2001 by Standard Media.

Yahoo Launches, Napster Fades

Jun 29 2001 08:35 AM PDT

A deal for Launch Media would make Yahoo a Web-music powerhouse, and Napster use dwindles.

Yesterday Yahoo announced its intention to buy Launch Media, which is among the last of the independent Internet media companies. Yahoo would pay $12 million in cash for Launch, valuing the smaller company's outstanding shares at 92 cents, some 50 percent above their recent trading range. According to the AP, Launch has 6.4 million users.

A number of outlets stressed the inevitability of the deal as the online music business consolidates. Wired News quoted Webnoize analyst Ric Dube: "We've now established the ABC, NBC, CBS and Fox of music distribution. ... The era of the startup is over." The four big players Dube has in mind are RealNetworks, America Online, Napster and now Yahoo. (No Microsoft properties made Dube's list.)

Echoing the consolidation theme, quoted Launch CEO David Goldberg: "It is not necessarily a good idea to be a small, public media company." Writing for TheStreet, George Mannes offered detail on Yahoo's plans for converting users of free music services into paying customers.

Several outlets mentioned Yahoo's existing deal with PressPlay, an online subscription service for music from two of the major labels, Universal and Sony. Wired added that Yahoo's portal competitors are "expected to offer subscription services with music from EMI, Warner Music and BMG." Everybody mentioned the lawsuit that the RIAA filed against Launch in late 1999 on behalf of four of the major music labels (all but Warner). As of yesterday, Launch announced that it had reached a deal with one of the labels, Universal.

The other company being sued by the RIAA, Napster, was also in the news today. ZDNet and USA Today covered the introduction of the song-sharing company's new version of its software, which clamps down even more on the sharing of copyrighted songs. Both outlets quoted figures from Webnoize, which estimated that current Napster users are sharing only 1.5 songs apiece, down from 220 at the service's peak. ZDNet ran some quotes from Slashdotters pronouncing the death of Napster. "Not being able to get on the Napster network is no great loss; it has been useless for months," one said.

Yahoo to Buy Launch Media

Napster stops its old ways

Yahoo thinks entertainment with Launch buy

Yahoo Launches Into Web Music

Yahoo! Acquiring Launch Media

Yahoo acquires Launch Media
USA Today

Yahoo! Acquisition of Launch Shows How Online Music Is Consolidating

Yahoo Expands Music Portfolio With Deal to Buy Launch Media
The Wall Street Journal
(Paid subscription required.)

Yahoo enhances music offerings by acquiring content site (AP)

Napster upgrade makes music scarce

Report: Napster use profoundly diminished
USA Today (Reuters)