Yahoo to Buy Musicmatch
For $160 Million in Cash

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Yahoo Inc. agreed to acquire digital music service Musicmatch Inc. for $160 million in cash, pushing the Web portal into the middle of the increasingly competitive market for music downloads.

Musicmatch, founded in 1997, operates a music-download store on the Web, and also makes a popular software program that helps computer users organize their music collections and burn CDs.

"Yahoo is committed to being a major player in digital music," Yahoo Chairman and Chief Executive Terry Semel said in a prepared statement.

Until now, Yahoo, of Sunnyvale, Calif., has stayed out of the crowded market for online music sales, which is dominated by Apple Computer Inc.'s iTunes service.

A spokeswoman for the company said Yahoo "carefully planned its entry" to the digital media area, and that this acquisition is one of several the company plans to build its portfolio.

Yahoo operates a music site called Launch that offers information on artists and streaming downloads of a handful of songs and music videos. Both Launch and Musicmatch offer free Internet radio services.

Companies have been racing to tap consumer interest in downloading music -- a business made considerably less daunting now that record labels have become more willing to license their content. Earlier this year, Wal-Mart Inc. launched its own music store, and last month Microsoft Corp. also unveiled its online music service.

Musicmatch has been selling music online since September 2003. The site says it has more than 700,000 songs available for download.

Yahoo expects to close the acquisition in the fourth quarter.