Stock Watch: EMusic Rocks After AOL Deal

Shares of online music distributor EMusic (Nasdaq: EMUS) climbed 1-5/16 to 16-7/16, a gain of nearly 8.7 percent on Monday, after the company announced a key distribution deal with America Online. Under the terms of the deal, EMusic's downloadable music will be available through America Online's ICQ, Spinner and Winamp services.

Specific financial terms for the non-exclusive three-year deal were not disclosed, but EMusic.com will be paying AOL a fixed fee as well as a share of transaction revenues. AOL will also get warrants in EMusic.com. Regardless of what EMusic.com is giving AOL, Wall Street seems to like this deal right now. After all, AOL has just given EMusic.com a massive number of potential customers. ICQ, Spinner and Winamp currently reach more than 50 million users.