EMusic.com: Tuning Up for a Sell-Out?
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An online music site worth considering is EMusic.com (EMUS) . True, the stock price has been erratic -- with a range of $4-1/2 and $35 (the price is now $16-1/8). But the company has been pursuing an aggressive acquisitions strategy.
Last week, the company made a particularly savvy move by purchasing Tunes.com, a company which had filed to go public. The price tag was $130 million, which looks like a bargain. With the deal, Emusic.com gets such marquee properties as RollingStone.com and DownBeatJazz.com. This rich content will be a great way to help spark e-commerce transactions of EMusic's 50,000 song library. What's more, EMusic got Internet Underground Music Archive, which is a site for unsigned bands.
Also, in mid November, Emusic.com purchased Cductive.com for $38 million. The company has rights to 350 independent labels with 65,000 tracks, of which 6,500 are online.
The Emusic e-commerce approach is quite simple and is amenable to impulse buying. The music tracks are in MP3 format and sell 99 cents per song, or $8.99 for an album. The music can be downloaded on a hard drive or a portable MP3 player.
True, the financials are minimal. The reveues during the last quarter were a mere $180,000. Losses? Well, $13.7 million. However, by using its stock as currency to purchase content and registered users, EMusic can leverage itself to the point where it will, ironically enough, be a very attractive buyout candidate itself.
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