AOL Poised To Be Major Online Music Sales Channel
With Time Warner Inc.as planned merger with EMI Group Plc, America Online may become the new power in music sales and distribution, and not just over the Internet.
The merger is seen as an unprecedented opportunity to leverage music content over AOL’s distribution channels through the use of MP3 technology. An album could be paid for over the Internet, downloaded, and then played on an MP3 player.
Time Warner will pay EMI shareholders $1.2 billion in cash after the merger is complete. The merger, like the $145 billion AOL/Time Warner merger, needs regulatory approval.
AOL will have management control over the combined company, which would be worth some $20 billion and earn profits in the range of $8 billion. That could make it the largest music company in the world, surpassing Seagram Co.’s Universal Music Group, with sales of approximately $6 billion. Worldwide market share could be as much as 20%.
The new company — to be called Warner EMI Music — would not only includes such labels as Virgin, Atlantic, WEA, and HMV, but also such artists as Madonna, the Beatles, Eric Clapton, and the Rolling Stones.
