Tunes.com Inks Road Runner, Clear Channel Deals

In two separate deals this week, online music service Tunes.com is reaching out to TV viewers and radio listeners in attempts to build up its customer base. Tunes.com announced a deal Monday with Clear Channel Communications to promote its Web site via Clear Channel's TV, radio and outdoor billboard advertising avails. On Tuesday, the company announced a separate deal with Road Runner to create a co-branded music section on the cable Internet service.

Clear Channel (NYSE: CCU) agreed to invest about $15 million in Tunes.com, with a warrant to purchase up to an additional $22.5 million in stock over the next three years. The two companies plan to establish a strategic marketing and sales relationship to use Clear Channel's advertising ability to promote Tunes.com. "We are always looking for ways to leverage our programming experience and reach on new media platforms," Clear Channel CEO Lowry Mays said.

The transaction is subject to the completion of Tunes.com's initial public offering. Tunes.com, an online music network that provides exclusive music content and operates the branded music sites RollingStone.com, TheSource.com, and DownBeatJazz.com, filed an initial public offering of 4 million shares in mid-June, tentatively priced at $13 to $15 per share. 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. The shares, slated to trade under the ticker symbol TUNZ, are expected to hit the market this week.

The two companies did not elaborate on how they plan to work together. Clear Channel is an "out-of-home" advertiser operating radio and television stations and outdoor displays in 32 countries. Clear Channel operates 489 radio and 19 television stations in the United States and has equity interest in more than 240 radio stations around the world. The company also operates more than 425,000 outdoor advertising displays.

Road Runner is a joint venture of Time Warner Inc., MediaOne Group, Microsoft Corp. (Nasdaq: MSFT), Compaq Corp. and Advance/Newhouse. The service's Tunes.com music section will showcase special music listings to more than 320,000 Road Runner customers, who get their Internet access via TV cables at a faster rate than typical telephone lines. The Tunes.com section, slated to launch toward the end of next month, will feature content from Tunes' RollingStone.com site.

Taking advantage of the greater bandwidth the cable service provides, Tunes.com's Road Runner site will feature BigVideo, a collection of 150 music videos available on demand, and Daily Video News, a music news report from RollingStone.com online personality Judy B. The section will also include weekly RollingStone.com flash news features, album reviews and concert webcasts. As reported, Tunes.com plans to start selling downloadable music via the RollingStone.com sites in September as well.