2010 could be busy year for digital music mergers

Fri Jan 15, 2010 10:14pm EST
 
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By Antony Bruno

DENVER (Billboard) - Think last year's acquisitions of iLike, imeem and Lala marked the end of consolidation for digital music services? Think again.

Gradually thawing credit markets and an increasingly competitive digital music landscape could make 2010 a banner year for mergers and acquisitions.

Apple's purchase of Lala in December lends a greater degree of legitimacy to the "cloud-based" access model for music distribution. And that deal, along with MySpace's purchase of iLike and imeem, will consolidate innovative features into a single, well-financed service -- which is surely better for the recording industry than watching them die on the vine individually.

"I see it as a positive sign," says David Ring, executive vice president of business development and business affairs for Universal Music Group's eLabs. "If they cannot or choose not to go it alone, that's OK. Maybe they need more economic backing in order to make something into an enterprise of great worth. I'm encouraged by the interest in the acquisition of various music services."

WHO'S IN THE MARKET

Expect to see Apple and MySpace continue their respective buying sprees. MySpace Music wants to expand quickly into areas like merchandise sales and concert ticketing and has more cash than it has developers. And Apple, for all its dominance in the a la carte download space, is playing catch-up in areas like social media, discovery and recommendations.

Meanwhile, Google is said to be eyeing a stronger digital music presence not only to beef up its music search results features but potentially to expand into additional music services for devices based on its smart-phone operating system, Android. In fact, Google reportedly considered buying Lala before Apple snatched it away.

Microsoft is not only relaunching elements of its MSN portal to improve its search and social networking features, but may also be seeking ways to jump-start its struggling Zune service with an acquisition in perhaps the mobile or Internet radio space.   Continued...