AOL buys its way into music downloads

AOL demonstrated another shift in its changing priorities when it announced the acquisition of the online music downloads service Music Now.

In a burst of originality the new service will be called AOL Music Now. Currently available in the US only, Music Now allows visitors to either buy music at 99 cents a track or through a subscription basis from any Internet-connected PC for $9.95 a month. Customers who may want to copy the music to a portable MP3 player need to stump up $14.95 a month. This subscription plan uses the Microsoft ‘PlayForSure’ technology and works with Windows Media Player 10.

The company already has a music service ‘AOL Music’ which will now be amalgamated with the new acquisition. The tie up with AOL now means that at some point Music Now is likely to be rolled out internationally although on past record, this could take some time.

The ISP business in which the company became the dominant player in the US and a major player around the world has now become commoditised even at the broadband level. As a result, the company has been unable to compete with ultra cheap Internet access-only products as people have turned away from its ‘walled garden’ approach. Therefore the company is moving away from providing connectivity towards providing content and trying to cash in on the boom in accompanying online advertising.

Being part of Time Warner will be a great advantage of course and there are signs that for the first time Time Warner is giving preferential treatment of online properties, such as the upcoming Harry Potter movie, to support AOL rather than franchise it out elsewhere. The acquisition of the Music Now business is another sign of the changed priorities at Time Warner as it faces up to challenges from Yahoo!, MSN and increasingly Google as it too becomes an internet portal.

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