MP3.com, Cox Dial Up New Net Radio Venture

Self-avowed music rebel MP3.com and established media conglomerate Cox Interactive Media announced Tuesday that they will form a new company to create a network of Internet music portal sites.

Billed as MP3radio.com, the new network will offer free downloads and feature seven popular music formats, including country, pop and urban adult contemporary. Cox Radio, which operates nearly 60 radio stations in 12 markets, will reportedly be the first affiliate partner.

The venture is a natural spin-off of Cox Interactive Media’s $45 million (US$) investment in MP3.com. The deal gave the company a 10 percent stake in the namesake of the digital music industry, helping to legitimize an industry that had been scorned by the traditional recording industry as a form of piracy.

The two companies are formally announcing the venture Tuesday afternoon at the National Association of Broadcasters conference in Orlando, Florida.

A Flurry of Activity

Long used to being the whipping boy for the recording industry, the online music industry is suddenly the hottest thing on the Internet since, well, the last hot thing on the Internet.

Viacom’s MTV Networks Online also announced Tuesday that it is forming a separate Internet music company, while America Online is gearing up to package its new Spinner.com acquisition and the music software maker Nullsoft.

Sony, Universal and other major record labels have accepted that they can’t beat the online music industry, so they might as well join them. The stakes, of course, are enormous. Some analysts have predicted that online music sales will reach $4 billion by 2004.

A Changing of the Guard

MP3.com continues to revel in its “us against them” struggle with the recording industry. However, the company has undergone an IPO and garnered considerable financial support from backers. Its underdog collar surely doesn’t fit as well as the old days.

Cox Interactive Media is a subsidiary of Atlanta-based Cox Enterprises. The parent company owns cable TV, newspapers and radio stations. The Internet arm operates a network of Web sites, including 25 city sites.

The online music industry is obviously a draw for Cox Interactive. Earlier this month, the company invested $30 million in Tickets.com, which gives it exclusive rights for concert tickets in 65 American markets. Excite@Home, which is partly owned by Cox’s cable division, invested an additional $55 million in Tickets.com.