AOL Buys MusicNow

AOL is expanding its pay-for-music business with its acquisition of MusicNow, the company said Thursday.

The deal gives AOL a huge boost in the online music race against the likes of Apple’s iTunes, which currently dominates the market.

The deal will also extend its music-loving audience beyond the virtual walls of the AOL customer base and its MusicNet service. AOL will gradually migrate those MusicNet users to the new service, which goes by the name AOL Music Now, officials said.

“The MusicNow transaction allows us to superserve our AOL members and expanding Web audience with a truly best-in-class, full-service, digital music platform — giving us the opportunity to offer an unparalleled music service,” Ed Fish, AOL premium and subscription services senior vice president and general manager, said in a statement.

“Combined with leading programming on AOL Music, the easy-to-use features for music browsing, discovering, sharing, and purchasing of MusicNow provides a new level of customization and personalization of online music.”

AOL Music Now will come in two tiers. A $9.95 per-month service allows users unlimited downloads of music streams to their network-connected devices and access to the AOL Music Now portal.

The $14.95 per-month service gives customers the online option plus the ability to download music tracks to the Windows Media Audio (WMA)-compatible music player.

Visitors can also opt for the a la carte option of paying 99 cents per track if they don’t want to sign onto the subscription service, officials said.

In an effort to build a community, AOL is giving Internet users a free 30-day trial of the service, though the service requires an AOL membership and users will have to enter credit card information and cancel the service in order to avoid getting billed.

The online service is very Windows-centric. Users need to be running Windows XP, Internet Explorer 6 (IE 6) or higher and Windows Media Player 10 in order to surf the site and listen to the music.

Nicholas Graham, an AOL spokesman, said the company is working to get the popular Winamp Media Player working on the service.

Graham also said AOL Music Now will not affect its existing arrangement with Apple, which was struck in 2003 when Apple announced the service’s support for Windows users.

“The important thing is the relationship with Apple will continue. It’s been a very strong relationship for us and for Apple and obviously for consumers,” he said. “Apple and iTunes will continue to service AOL members who own iPods. We’re going to offer both services to AOL members and AOL.com users.”