Online music company Launch Media, Inc. has inked a deal with EMI Recorded Music to showcase EMI’s vast inventory of music videos.
In return, the London-based EMI — a unit of EMI Group PLC — will get a small share of Launch’s advertising revenue, as well as about a one percent stake in the Santa Monica, California-based company.
Access To Thousands Of Videos
According to company officials, Launch’s Web site will now have access to thousands of videos. The exceptions are those restricted by artist contracts.
While EMI does not stand to make much from sharing a small portion of Launch’s advertising revenue, its recording artists will gain exposure to the Web site’s one million registered users.
The deal also underscores EMI’s strategy of taking equity stakes in online music companies in return for certain rights to its catalog. For example, EMI has about a 36 percent stake in musicmaker.com, a Web site that offers personalized CD compilations.
Second Deal For Launch
Launch also cut a deal with Sony Corp.’s Sony Music entertainment earlier this year. However, Launch’s deal with EMI is broader, because it allows consumers to download the music publisher’s videos “on demand.”
According to Launch CEO Dave Goldberg, Launch has substantially increased its current inventory of 1,500 videos by joining forces with EMI. The move also gives Launch a hedge against rivals such as Tunes.com and Viacom.
EMI Group (OTC: EMIPY) has a roster of top artists such as Garth Brooks, the Beastie Boys and Smashing Pumpkins, which has helped make the company the third-largest music company in the world.
It markets its music through such well-known labels as Capitol Records, Chrysalis and Virgin. Additionally, EMI is the world’s largest music publisher, with control of more than one million copyrights to songs.
In its fiscal year ending March 1999, EMI earned $235 million (US$) on revenue of $3.8 billion.
Launch Media’s Web site offers music and related content, including reviews and interviews. The company also offers free online access to personalized music and a monthly CD-ROM that features the latest song and video snippets.
Launch also provides content to about 1,000 radio stations and has marketing alliances with approximately 20 other online music sites. It generates about 60 percent of its sales from advertising, with the rest of its revenue coming from subscription fees and e-commerce.
In its fiscal year ending December 1998, Launch lost $13.4 million on revenue of $5 million.
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