Online music provider MP3.com (Nasdaq: MPPP) announced today that it will expand its services by acquiring privately held online event planning Web site seeUthere.com in a stock deal valued at approximately $150 million (US$).
The San Diego, California-based MP3.com will issue almost six million shares of its stock to acquire seeUthere.com. The company’s stock was trading at $25.25 early today.
SeeUthere.com’s services include online ticketing, automated invitation and RSVP management, instant online reports that monitor ticket sales and revenues, customized Web sites, and more. The Mountain View, California-based company is owned by TransComputing International Corp.
“The acquisition of seeUthere.com is an excellent complement to our core business,” said MP3 CEO Michael Robertson.” It extends the community tools that MP3 provides artists to market themselves to fans in the new music economy.”
The deal, which is expected to close in the first quarter of 2000, calls for MP3 to form a subsidiary that will merge with seeUthere.com. Upon the close of the transaction, the company will be a wholly-owned subsidiary of MP3. The current seeUthere senior management will remain, MP3 said.
Slightly Out of Tune
The vanguard of the Internet music industry since its 1997 launch, MP3 has been struggling to keep up with the new crop of competition. Aside from Internet upstarts, MP3 is also competing with Big Five recording industry titans Sony, Universal, BMG, Warner and EMI. The Big Five fought tooth-and-nail to keep the Internet music industry grounded, but the group has largely abandoned that tack and has opted instead to form their own online ventures.
Many analysts believe that the online music industry delivered disappointing holiday shopping results this year, and cite complicated software, the price of portable music devices, and the ongoing battle over copyright ownership as culprits.
Fighting For Talent
The acquisition of seeUthere does make sense for MP3, given that attracting new talent and keeping it satisfied is an important task for the company. The company announced a plan last month to pay artists for the downloading of their music.
MP3 has 250,000 songs available for download and attracts an average of 250,000 visits a day to its download site. The company booked third quarter revenues of $4 million and showed a net loss of $19.9 million. The company went public in July and saw its share price soar to over $63 — giving it a value of $6.9 billion — before it started to slide.