Yahoo! Acquiring Launch Media

The urge to merge continues apace in the online music space as Yahoo! Inc.
said it has agreed to acquire Launch Media Inc., which
offers an array of music and music-related editorial content, in a $12
million cash deal.

Yahoo!, moving to bolster its entertainment offerings,
said it will acquire all of Launch’s outstanding shares at 92 cents per share.

Santa Monica, Calif.-based Launch’s stock price soared 32 cents in early
trading, as it had closed yesterday at 58 cents a share. Clearly Yahoo! got a
bargain; Launch’s 52-week high is is $9.25 a share.

Meanwhile, just in time to be acquired, Launch said that it has settled major
aspects of a copyright infringement suit brought by Universal Music Group and
other major record labels in connection with its Internet radio service.

The acquisition deal today follows a wave of activity in the online music
arena, prompted in part by all the lawsuits that crippled Napster, opening
the door for more potential profitability in Internet music distribution. In
fact, a RealNetworks announcement last April that it would form an online
music subscription service in conjunction with AOL Time Warner, Bertelsmann
AG and Emi Group opened the doors to consolidation as companies scrambled not to be
left behind.

MusicNet’s and Duet’s wheelings and dealings, for instance, have all the
makings of a nuclear arms race. Some of the other recent deals include Vivendi Universal’s acquisition of, Universal’s devouring of and Loudeye’s recent deals with MSN and others.

For its part, Santa Clara, Calif.-based Yahoo! said today’s move is part of
its “commitment to provide online music fans with the most compelling and
comprehensive music experience.”

Yahoo! said Launch’s services will complement its current entertainment
offerings, including Yahoo! Music, Yahoo! Broadcast and Yahoo! Radio, by
giving Yahoo! users access to on-demand music videos, exclusive artist
features and music news covering all genres. In addition, consumers will have
the ability to experience streaming music stations with audio and video
content tailored to their entertainment tastes.

Launch’s co-founders co-founders, CEO David Goldberg and President Bob
Roback, will remain with the company following the acquisition.

As to the copyright settlement with Universal Music Group, Launch will make
an unspecified payment for past performances, and has entered into a
non-exclusive license with UMG for use of UMG-controlled recordings in
LAUNCHcast, its Internet radio service.

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