AOL and EMusic Partner to Offer Web Music.

AOL and EMusic.com announced an agreement to offer downloadable music via AOL_s ICQ (messaging), Spinner (music) and Winamp (music) services. Under the agreement, EMusic.com and the ICQ, Spinner and Winamp brands will cross-promote downloadable music products using reciprocal links and web advertising. EMusic.com will also develop co-branded sites with ICQ, Spinner and Winamp for downloadable music. The EMusic business model is to sell complete albums or individual tracks from its music collection that includes over 20,000 tracks. Albums are currently priced at $8.99 and individual tracks can be bought for 99 cents. Under the agreement, EMusic.com will pay AOL a fixed marketing fee and a share of revenues and will also receive and undisclosed number of warrants in EMusic.com. The ultimate destiny of music on the web is difficult to determine, although there can be little doubt that it will consist of both rock star sites dealing directly with the customer and aggregation sites where individual tracks or compiled albums can be purchased. EMusic occupies a strong position in the second of these markets, as indeed does MP3.com. AOL itself is pursuing a policy of network share. The larger the network you have, in terms of regular visitors, the more it is possible to extract a share of any transaction that you assist in enabling. AOL has managed to outdistance Microsoft in the size of network it has built and it seems better able that its competitors to leverage its market position.