Tunes.com Serenades Musicmaker, Rolling Stone

As its debut on the stock market approaches, Tunes.com is stepping up efforts to expand its online music offerings. Through a deal with Musicmaker.com (Nasdaq: HITS), Tunes.com plans to offer new digital audio downloads from Musicmaker.com on its Web site. At the same time, Tunes.com has relaunched RollingStone.com with plans to begin selling digital downloads from the music magazine site.

Tunes.com released an initial public offering of 4 million shares in mid-June, tentatively priced at $13 to $15 per share. The stock is expected to begin trading August 9th under the symbol TUNZ. At that price, the offering could raise $52 million to $60 million (US$) to fund new sales and marketing initiatives and strategic alliances, the company says.

Making New Music

Musicmaker.com and Tunes.com announced a letter of intent Tuesday for a five-year marketing alliance to add Musicmaker.com’s holdings to the titles available at Tunes.com. In addition, Musicmaker.com will become the exclusive provider of customized CD compilations on all of Tunes.com’s sites, which include RollingStone.com, TheSource.com and DownBeatJazz.com.

Musicmaker.com agreed to spend $5 million over five years to advertise and promote its products and services on the Tunes.com sites. Each company will also buy $5 million of stock in the other, making Musicmaker.com one of two major shareholders in Tunes.com along with Goldman Sachs Co. The shares Musicmaker.com plans to buy would be in addition to the 4 million Tunes.com hopes to sell on the open market next month.

Digital Audio Library

The two companies plan to create co-branded pages on Tunes.com to highlight Musicmaker.com’s custom CDs. Musicmaker.com brings a library of more than 200,000 tracks from 100 record labels. The company has a five-year licensing agreement to sell via the Internet EMI Music’s 500,000 song library and exclusive marketing agreements with Columbia House, Audio Book Club, Platinum Entertainment, Spinner.com and Woodstock.com.

Not only is the alliance well-timed for Tunes.com’s stock offering. Tunes.com Chairman Howard Tullman says it also makes sense for fall, giving the new marketing partners a brief honeymoon before the holiday selling season takes off. By then, audio industry executives expect at least eight major consumer electronics or computer manufacturers to have secure, portable Internet music players on the market, he said, which will expand the value of digital downloads.

Rolling Shopping Cart

With the Musicmaker.com venture lingering in the future awaiting a signed contract, Tunes.com has focused its immediate attention on giving Rolling Stone magazine’s Web site a makeover. The site features new sections focusing on local music, games and movies. In addition, visitors can now communicate with Rolling Stone editors online. Through a new venture with NatWest’s Magex division and InterTrust Technologies, Tunes.com plans to add to RollingStone.com and its other sites the ability to securely distribute and sell music.

The local music section, still under construction, will allow fans to check the performance calendar in their community, read show previews, fan reviews and listen to MP3 audio tracks from local artists. RollingStone.com already offers downloads of major artists, such as Beck, Public Enemy and L7, and from relatively unknown artists recommended by Rolling Stone editors.

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