RealTime IT News

MP3 Site Gets $11 Million Investment

Venture capital firm Sequoia Capital is adding music download site MP3.com to its list of investments which have included Yahoo! Inc. and 3Com Corp.

Sequoia plans to invest $11 million in the company, which allows users to download music in the MP3 format. The site also features music news and community features.

The MP3 format has often been at the center of controversy, with record companies saying it's near-CD quality makes it easy for pirates to circulate copyrighted material, skirting royalties. Last fall, the Recording Industry Association of America sued Diamond Multimedia over plans to release its Rio MP3 player. The player was shipped after a federal judge dismissed the group's claims.

Michael Robertson, MP3.com's chief executive officer, said Sequoia's investment with fund engineering and other corporate expenses.

Many predict the MP3 format will eventually prompt a shift in the way music and the revenue it generates is distributed. As broadband connections become a reality, MP3 stands a chance of lessening the grip of retail giants, which currently get about a 10 percent cut from each CD sold. MP3 also makes independent distribution possible.